The better-controllable laser-induced cavitation bubbles are widely used in scientific research and industrial applications. This paper describes the mechanism of the laser-induced cavitation bubbles: vapor bubble and plasma bubble. Effects on the process of bubbles′ expanding and collapsing by liquid properties and environmental conditions are analyzed. Finally, the applications of laser-induced cavitation bubbles in the fields of microelectronics, biomedicine, preparation of nanomaterial ands surface modification are discussed.