Layered rare-earth hydroxides (LRHs) exhibit some characteristics of inorganic layered compounds (i.e., ion exchange, intercalation, and nanosheets exfoliation). LRHs possess the unique optical, electrical, magnetic, and catalytic properties of rare-earth ions. Therefore, LRHs as inorganic layered compounds have a wide range of potential applications and have attracted recent attention. The intercalated anions of LRHs readily exchange with various anions, and subsequently, nanosheets are exfoliated from the host layers. Two-dimensional nanosheets can maximize the physicochemical properties of the host layers under specific conditions. Under specific conditions, two-dimensional nanosheets can demonstrate the physicochemical properties of the host layers. LRHs nanosheets serve as effective building blocks for constructing novel functional materials.This review represented recent research progress on the LRHs, mainly on the structure characteristics, controllable synthesis methods, and nanosheet exfoliation. This review also highlighted the existing applications of LRHs in transparent ceramics and thin film fabrication. The structural and physicochemical properties of functional ceramics prepared using LRHs were summarized, and some insights into future research directions for efficient LRH synthesis and structural design were given, providing a reference for the potential applications of LRHs in various fields.LRHs are a novel class of anionic layered compounds, which can be synthesiszed via homogeneous precipitation and hydrothermal reaction as the most commonly used and effective synthesis techniques. A variety of LRHs pure phases are synthesized via precipitation. The hydrothermal method offers some advantages like high product purity, crystallinity, and minimal contamination. LRHs with different phases and morphologies can be prepared via controlling the hydrothermal synthesis conditions. A one-step synthesis technique for ultrathin LRHs nanosheets is developed by controlling the synthesis temperature.LRHs combine the characteristics of inorganic layered materials and rare-earth ions. The properties of ion exchange and nanosheet exfoliation in LRHs are consistently under scrutiny. NO3- ions in nitrate-type LRHs can exchange with F- and SO42- ions at room temperature. LRHs with an increased interlayer spacing due to ion exchange can be delaminated into two-dimensional nanosheets in aqueous or organic solutions. The use of NH4NO3 as a mineralizer expands the range of conditions for synthesizing LRHs, and also generates the larger-sized grains.The powder preparation process in ceramic manufacturing has a significant impact on the optical properties of transparent ceramics. LRHs prepared by wet-chemical methods can serve as precursors for oxide ceramic powders used in sintering and transparent ceramic production. LRHs are prepared by a one-step method at low temperatures and subsequently by ion exchange and calcination to produce oxide powders, which are more favorable for transparent ceramic production. The resulting transparent ceramics exhibit a fewer defects and a higher transparency. Compared to conventional manufacturing processes, the method of producing transparent ceramics through LRHs allows the acquisition of more uniform and stable ceramic particles, while effectively reducing impurity contamination. Moreover, it enhances the diversity of transparent ceramics functionality via the effective doping of rare-earth elements, thus simplifying the preparation process.A technology for preparing transparent ceramic fluorescent films is developed based on LRHs via utilizing their chemical properties and special interfacial reactions. LRHs undergo ion exchange and exfoliation treatment to obtain the dispersed nanosheets. The exfoliated nanosheets are firstly coated onto a hydrophilically treated substrate and then sintered to prepare a transparent ceramic film. This process can produce a variety of rare-earth-doped Y3Al5O12 and GdAlO3 films, exhibiting superior fluorescence properties and thermal stability of luminescence.Summary and prospects LRHs can be synthesized via precipitation and hydrothermal methods. However, the synthesis of doped LRHs for a few rare-earth elements remains elusive due to significant variations in the physicochemical properties of different rare-earth elements (i.e., primarily stemming from their distinct ionic radii). It is possible to effectively control the phase and morphology of LRHs via adjusting the synthesis parameters such as temperature and pH value, thereby expanding their application range. LRHs can increase interlayer spacing through anion exchange, allowing for the exfoliation of nanosheets. It is possible to effectively exfoliate large-sized nanosheets that retain the characteristics of host layer. However, the synthesis and exfoliation under hydrothermal conditions may not meet the production requirements for large-scale applications. Therefore, low-temperature, one-step synthesis of LRHs nanosheets could be a future research aspect.LRHs can be used as precursors to prepare oxide ceramic powders, meeting the strict requirements of transparent ceramics for sintering powders. The unique layered structure and physicochemical properties of rare-earth ions make LRHs highly promising for transparent ceramic production. Meanwhile, the nanosheets exfoliated from LRHs as ideal building units for transparent fluorescent films used in optoelectronic devices have attracted much attention in transparent ceramic film preparation. This can have a theoretical foundation for the future application of LRHs in the field of high-performance LEDs and laser lighting. The existing research primarily focuses on the application of LRHs in photonic materials. A further research on efficient synthesis and structural design can have a promising potential to enable the widespread application of LRHs in various fields.