The essence of the sponge city construction is the reconstruction of the urban water system. The most fundamental and important issue in sponge city research is to clarify the hydrological processes involved in the sponge city system. This study defines the connotation of the sponge city system, analyzes the input and output items of the sponge city system, and discusses the hydrological processes involved in the sponge city system, that is, the transformation processes of the "Five-water" (atmospheric water, surface water, soil water, drainage water, and ground water) in the sponge city construction area. And then the research status and future research points of the sponge city system are systematically summarized from the following five aspects: precipitation and pollutant input, water quantity and quality conversion of sponge facilities, runoff monitoring and flow concentration parameters of drainage pipe network, runoff and pollutant discharge processes, and ecological benefit and groundwater recharge in the sponge city construction area. This study is helpful to the basic theoretical research and the engineering practice of the sponge city construction, as well as to the transformation of urbanization development in China.