Biological soil crusts (BSCs) are special complexes composed of cryptogam, microorganism and soil fine particles bonded by their exuding mucilaginous material, which widely distributed in various climate and habitat conditions. As important components of ecosystem, BSCs play vital roles in soil ecological, hydrological, biological and geochemical processes as well as ecological restoration process. The paper reviewed the ecological functions of BSCs, mainly centering on the effects of BSCs on soil physical, chemical, and biological characteristics, and soil hydrological and erosional processes. Although much has been achieved, there are still many problems need to be deeply and systematically explored. The future studies may focus on the extension of the study region and spatial-temporal scale, multiprocess coupling mechanism, the process of BSCs influencing nitrogen cycle and its responding mechanism to nitrogen deposition, and the spatial distribution and interaction between vascular plants. The results can promote the correlational research on BSCs and deepen the understanding of BSCs ecological functions and earth surface processes.