Annular laser cladding technology, consisting of a ring-shape focused laser beam and an internal laser coaxial- powder, is an advanced material surface deposition technology. Compared with the conventional laser cladding technology, annular laser cladding technology has attracted tremendous attention due to improvement of the laser energy utilization, increase of deposition rate of the cladding material, accuracy of coupling on laser and cladding material, stability of the cladding process and bonding quality of the cladding layer, respectively. According to the recent research, the working characteristics of various typical processing heads based on the traditional laser cladding technology were introduced in this paper, and the principles and advantages of annular laser cladding technology were summarized herewith. Furthermore, the effects of processing heads on annular laser cladding technology were analyzed. The relationship between the internal optical design of the annular laser cladding head and the morphology of focused spot was reviewed in detail. In addition, on the basis of different optical designs, the internal structures of representative processing heads were analyzed, and therefore their working features were discussed. What’s more, the influences of the change of focused spot shape and the energy distribution on the optical-material coupling process were investigated. Applications of typical deposition about the cladding materials in different states (solid phase or liquid phase) performed by the ring-shaped irradiation were described. At last, a couple of the potential applications and the development trends on the annular laser cladding technology in the field of laser metal deposition were put forward.