Excessive exploitation and massive coal mine closures have brought about extensive goafs in Shanxi where 8780 coal mines have been abandoned in the last 20 years. Acid mine drainage (AMD) poses severe environmental impact and has become a prominent problem in Shanxi abandoned coal mine areas, which has aggravated the shortage of water resources and threatened the safety of the local drinking water supply. The purpose of this review is to protect the precious water resources and maintain sustainable use in Shanxi coal mines and downstream. By retrieving and analyzing about 90 domestic and international publications, a critical review of the AMD research results in Shanxi abandoned coal mines is conducted from the perspective of the formation mechanism, migration and transformation, prediction, treatment and management. The results shows that pyrite is the prerequisite for the formation of AMD, oxygen is the inducement, water is the carrier, and Fe³⁺ and microorganisms are the catalyst. The roadway system and geological structure are the dominant control factors. Finally, current difficulties and future research are pointed out. It is necessary to further strengthen the systematic research on the geological and hydrogeological conditions of abandoned coal mines, and explore an efficient, cheap, environmental technology, and construct the pollution risk assessment model for the AMD treatment. This study provides a scientific basis for the comprehensive treatment and management of AMD in abandoned coal mines in Shanxi.