Recently, much attention has been attracted to the use of biomass to produce functional carbonaceous materials from the viewpoint of economic, environmental and societal issues. Among different techniques, the hydrothermal carbonization (HTC) process, a traditional but recently revived method, presents superior characteristics that make it a promising route of wide potential application. This perspective gives an overview of the latest advances in the HTC process of functional carbonaceous materials from biomass. First, we discuss the preparation of carbonaceous materials synthesized by the use of either highly directed or catalyst/template-assisted methods, from crude plant materials and carbohydrates respectively. These carbonaceous materials not only have special morphologies, such as nanospheres, nanocables, nanofibers, submicrocables, submicrotubes and porous structures, but also contain rich functional groups which can greatly improve hydrophilicity and chemical reactivity. Further, a general look is cast on the applications of this kind of carbonaceous materials in environmental, catalytic and electrical areas. Recent advances have demonstrated that the HTC process from biomass can provide promising methods for the rational design of a rich family of carbonaceous and hybrid functional carbon materials with important applications.