The bonding of metallic alloys and composite materials in the form of a hybrid structure is a line of great interest for the current industry. The different machinability of both materials requires a specific machining process. Abrasive water-jet machining (AWJM) is an excellent technology for the simultaneous machining of both materials. However, defects at the micro and macro-geometric level have been detected in several scientific articles. In this review, a detailed study of the two main defects in metals, composite materials and hybrid structures has been developed. The conclusions of several scientific articles have been exposed for a better understanding of the topic in articles between 1984 and 2020. The influence of the cutting parameters on the reduction in kinetic energy of the water jet and the order of stacking of the materials in the hybrid structure is the main objective in order to minimize these defects. Cutting parameter optimization studies, predictive model proposals, process-associated defects and evaluation methodologies have been discussed. The aim of this article is to set a solid background on AWJM machining in hybrid structures and on the influence of cutting parameters on generated defects and machining strategies to obtain the best results at a macro and micro-geometric level.