This review introduces the environmental DNA (eDNA) method which is a newly developed technique to monitor biodiversity. eDNA are free DNA molecules contained in the shedding of skin, feces, saliva, gametes, and secretions. Recently, eDNA has become a global research hotspot owing to its sensitivity, accuracy, and easy implementation. Above all, eDNA can monitor biodiversity and biomass in real-time. Owing to the highly complicated characteristics of aquatic ecology, eDNA methods play a considerable role on this area. This review summarized the eDNA application and methods in aquatic ecosystems, outlined some aspects requiring improvement, and suggested future developments and innovations for research. eDNA methods were mainly applied in three research areas, namely biodiversity analysis, biomass evaluation, and invasive and endangered species monitoring. Currently, eDNA used for biodiversity research has mostly relied on meta-barcoding technology. Examples of different meta-barcoding applications, such as microscopic eukaryotes and aquatic animals have been summarized, and further research directions suggested. Regarding biomass evaluation, most eDNA achievements and limitations in this area have been summarized. Invasive and endangered species monitoring is possibly the most successful eDNA application, and many examples have been summarized to provide a comparative basis for relative researchers. The superiority and limitation of eDNA methods have been summarized based on published articles and the results from our laboratory. Finally, prospective eDNA applications have been listed to specify direction for further studies.