Abstract: The hydrological and carbon cycles are two fundamental biogeochemical processes of the Earth system, and they co-evolve through water-carbon coupling at the watershed scale. As a natural unit in terms of water and material balance, the watershed provides an appropriate scale for understanding this coupling and forms an important basis for addressing climate change and watershed water security through nature-based solutions. This review clarifies the water-carbon coupling processes in natural watersheds, analyzes the underlying coupling mechanisms, and synthesizes observational techniques and modeling frameworks for watershed water-carbon interactions. A bidirectional coupling framework for the watershed water-carbon cycle is proposed. The influences of climatic conditions on watershed water-carbon coupling are further discussed. In addition, major knowledge gaps are identified in terms of bidirectional coupling processes, quantification of interface processes, data support, and the impacts of extreme events, and future research priorities are highlighted. This review is expected to provide a scientific basis for watershed carbon neutrality, water security, ecological security, and food security, as well as for climate change mitigation and adaptation based on nature-based solutions.