Xylo-oligosaccharides are functional oligosaccharides with prebiotic activity derived from lignocellulosic biomass. They possess excellent physicochemical properties and physiological functions, such as regulating the intestinal microecological balance and preventing cardiovascular diseases, and have been widely applied in the food, pharmaceutical, and other industries. This paper mainly reviews the latest progress in the hydrothermal preparation of xylo-oligosaccharides and subsequent purification methods, such as solvent extraction, adsorption, membrane separation, and chromatographic separation, and provides an outlook on their future development.