The twin-screw compressor exhibits significant application value in the fields of energy, refrigeration, construction, transportation, and related domains. Owing to the benefits of short cycles and low costs, numerical simulation technology has attracted increasing attention. Over recent years, the numerical simulation technology for twin-screw compressors has advanced rapidly, and many important results have been achieved. This paper comprehensively discusses the modeling method of twin-screw compressors, the meshing technique, advances in numerical simulation of internal flow, the research status of numerical simulation research regarding structural operating conditions, and performance optimization. The synergistic potential between these technologies for improving the performance and efficiency of twin-screw compressors is investigated. The numerical simulation research progress of the internal flow and performance optimization of twin-screw compressors is systematically reviewed. Against the background of global energy saving and carbon reduction, this paper offers readers an in-depth understanding of the technical challenges, research hotspots, and development directions in the related field. It fills the relevant gaps within the current literature. The results highlight the role and potential of deep exploration of the intrinsic relationship between local complex flow characteristics and structural optimization for the performance optimization of twin-screw compressors. For conforming to actual conditions and pertinency, mathematical models such as multiphase flow and turbulence models should be further improved. The current research results remain constrained by the lack of comprehensive consideration of multi-field coupling. In the future development of energy-saving and environment-friendly high-performance twin-screw compressors, numerical simulation research should be developed for high precision, multi-physical field coupling, influencing mechanism research, energy-saving, and environmental friendliness, and intelligence. It establishes a theoretical foundation for further enhancing the performance and mechanism theory of twin-screw compressors.