Urban areas, characterized by dense populations and many socio-economic activities, increasingly suffer from floods, droughts, and heat stress due to land use and climate change. Traditionally, the urban thermal environment and water resources management have been studied separately, using urban land surface models (ULSMs) and urban hydrological models (UHMs). However, as our understanding deepens and the urgency to address future climate disasters grows, it becomes clear that hydrological disasters—such as floods, droughts, severe urban thermal environments, and more frequent heat waves—are actually not isolated events but compound events. This underscores the close interaction between the water cycle and the energy balance. Consequently, the existing separation between ULSMs and UHMs creates significant obstacles to better understanding urban hydrological and meteorological processes, which is crucial for addressing the high risks posed by climate change. Defining the future direction of process-based models for hydro-meteorological predictions and assessments is essential for better managing climate disasters and evaluating response measures in densely populated urban areas. Our review focuses on three critical aspects of urban hydro-meteorological simulation: similarities, differences, and gaps among different models; existing gaps in physical process implementations; and efforts, challenges, and potential for model coupling and integration. We find that ULSMs inadequately represent water surfaces and hydraulic systems, while UHMs lack explicit surface energy balance solutions and detailed building representations. Coupled models show potential for simulating urban hydro-meteorological environments, but face challenges at regional and neighborhood scales. Our review highlights the need for interdisciplinary communication between the urban climatology and urban water management communities to enhance urban hydro-meteorological simulation models.