Abstract: Aerosols primarily influence cloud formation and precipitation by regulating the radiative energy balance and altering cloud droplet properties through aerosol–cloud interactions. This paper presents a comprehensive review of the microphysical effects of aerosols. As cloud condensation nuclei or ice nuclei, aerosols can significantly alter the radiative and microphysical characteristics of clouds. An increase in aerosol concentration can lead to reduced cloud droplet sizes, increasing the cloud albedo to shortwave radiation, a phenomenon known as the cloud albedo effect. Simultaneously, aerosols can enhance the longwave radiation emitted by thinner clouds, thereby blocking more longwave radiation in the atmosphere, known as the cloud thermal emissivity effect. Nevertheless, the absorption of aerosols may promote cloud droplet evaporation, thus reducing the cloud albedo. Furthermore, aerosols significantly impact precipitation. When water vapor is insufficient or wind shear is strong, an increase in the number of cloud droplets and a reduction in droplet effective radius can suppress precipitation and extend the cloud lifetime. However, when deeper cloud formation occurs, an increasing number of droplets, especially smaller-sized ones, can be transported above the 0°C level, where freezing results in the release of latent heat, thereby promoting convective rainfall. Therefore, the microphysical effects of aerosols can suppress weak precipitation and enhance strong precipitation, leading to an increase in extreme weather events. However, many studies have observed phenomena that are inconsistent with these theories. To explain these discrepancies, this paper systematically presents four physical mechanisms underlying aerosol–cloud interactions: condensation and evaporation effects, water vapor competition effects, collision and coalescence effects, and entrainment effects. The competition among these mechanisms leads to the varied results observed in the reviewed studies. Finally, the paper discusses the challenges and future research directions, with an emphasis on enhancing observational data capabilities, developing a comprehensive framework for aerosol–cloud interactions under varying conditions, optimizing parameterization schemes, and promoting the application of artificial intelligence.