Owing to the high carbon and phosphorus contents, large specific surface area and slow P release capacity of P-rich biochar/hydrochar (CHAR), its application in aquatic (or soil) environments and positive effects on heavy metal (HM) adsorption (or immobilization) have drawn global attention. To provide an overall picture of P-rich CHAR, this review includes a systematic analysis of the current knowledge on the preparation methods, characterization techniques, influencing factors and environmental applications of P-rich CHAR reported in the last ten years. The key findings and recommendations from this review are as follows: (1) there is still a knowledge gap concerning the regulatory mechanism of the key active components of P-rich CHAR at the molecular level. The dominant factors influencing these active components should be elucidated. (2) P-rich CHAR has a high capacity to immobilize most HMs (e.g., Cd, Cu, and Pb). However, it performs poorly with several HMs (e.g., As). Future studies should focus on the interactions between P-rich CHAR and HMs found in soil/water. (3) To meet the long-term requirements for plant growth, more attention should be given to improving the slow-release capacity and utilization efficiency of available P. (4) There is a potential risk of P loss (or eutrophication) due to rainfall and runoff, although P-rich CHAR exhibits excellent performance in terms of HM immobilization and carbon retention. Several reasonable suggestions are provided to solve these problems. In summary, P-rich CHAR has promising prospects in environmental remediation if these shortcomings are overcome.