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Water level (or water surface elevation) is a fundamental hydrological variable. However, collection of water levels of lakes and reservoirs is laborious and expensive based on traditional methods. Satellite altimetry has largely changed the situation in the recent decade. This paper reviews the basic theory, data processing approaches and major products of radar altimetry, as well as the progresses made in inland altimetry, especially for lakes and reservoirs. The major findings show that (1) current studies mainly focus on one certain or a few lakes for detailed study; (2) most studies use data of one certain satellite altimetry mission (such as Jason or Envisat) and heavily rely on high level products, while less studies focus on the data processing of low level products; (3) the research topics are primarily about the changing trends and related drivers, and some are researching the water storage estimations and watershed hydrological modelling. In the future, more advanced data processing techniques (such as full-focused SAR) are needed to improve the quality of altimetry data over relatively small lakes and reservoirs. High quality data will open up more opportunities for hydrological research.