PurposeThis study aims to present a comprehensive review, critical analysis and implications of the augmented reality (AR) application and implementation in the construction industry arena and demonstrate the gaps along with the future research agenda.Design/methodology/approachThe construction industry has been under pressure to improve its productivity, quality and sustainability. However, the conventional methods and technologies cannot respond to this industry's ever-growing demands while emerging and innovative technologies such as building information modelling, artificial intelligence (AI), virtual reality (VR) and AR have emerged and can be used to address this gap. AR application has been acknowledged as one of the most impactful technologies in the construction digitalization process. However, a comprehensive understanding of the AR application, its areas of effectiveness and overarching implications in a construction project life cycle remain vague. Therefore, this study uses an integration of systematic literature review and thematic analysis techniques to identify the phases of a construction project life cycle in which AR is the most effective, the current issues and problems of the conventional methods, the augmented parameters, the immediate effects of using AR on each phase and, eventually, the overall influence of AR on the entire project. Nvivo qualitative data analysis software was used to code, categorize and create themes from the collected data. The result of data analysis was used to develop four principal frameworks of the AR applications – design and constructability review session; construction operation; construction assembly; and maintenance and defect inspection and management – and the gap analysis along with the future research agenda.FindingsThe findings of this study indicated that the application of AR can be most effective in the following four stages of a project life cycle: design and constructability review session; construction operation; construction assembly; and site management and maintenance, including site management and defect inspection. The results also showed that the application of AR technology in the construction industry can align and address building industry objectives by various elements such as: reducing project costs through the application of digital technologies, saving time, meeting deadlines and reduction in project delays through integrated, live scheduling and increased safety and quality of the construction work and workers.Research limitations/implicationsOne of the main limitations of this study was the lack of materials and resources on the downfalls and shortcomings of using immersive technologies, AR, in the construction project life cycle. In addition, most of the reviewed papers were focused on the experiments with simulations and in the lab environment, rather than real experiments in real construction sites and projects. This may cause limitations and inaccuracy of the collected and reported data.Practical implicationsThe results of this study indicated that the application of AR technology in construction industry can align and address building industry objectives by various elements such as: reducing project costs through the application of digital technologies; saving time; meeting deadlines and reduction in project delays through integrated, live scheduling; and increased safety and quality of the construction work and workers.Social implicationsApplication of AR in the various stages of a project life cycle can increase the safety and quality of the construction work and workers.Originality/valueThe reviewed literature indicated that substantial research and studies are yet to be done, to demonstrate the full capacity and impact of these emerging technologies in the field. The collected data and literature indicate that amongst the digital technologies, AR is one of the least researched topics in the field. Therefore, this study aims to examine the application of AR in construction projects’ life cycle to identify the stages and practices of a project life cycle where AR and its capabilities can be exploited and to identify the respective problems and issues of the conventional methods and the ways in which AR can address those shortcomings. Furthermore, this study focuses on identifying the overall outcome of AR applications in a construction project in terms of cost and time efficiency, process precision and safety.