Wetland is a transitional area where terrestrial ecosystems and aquatic ecosystems interact and influence each other, and it is an important ecosystem on the Earth’s surface. Due to the special characteristics of wetland ecology, the decomposition of wetland plant litter is slightly different from litter in forests, grasslands, and meadows and other traditional areas. The role of litter mineralization in the wetland ecological C cycle and the functional role of plant litter have been neglected. This study analyzes the decomposition mechanism and decomposition model of wetland litter material and focuses on the effects of the decomposition process of wetland litter material on the structure of the soil fauna community, decomposition of soil organic matter, sediment properties, and the dynamic changes in the C cycle of the biological system by combining domestic and international studies from recent years. Finally, we propose that the direction of future research on wetland litter decomposition should be to reveal the mechanism of wetland biodiversity and ecology, as well as the ecological correlation between aboveground and belowground biodiversity, with a view to providing a decision-making basis for wetland phytoremediation and wetland wastewater treatment.