Urban environments lie at the confluence of social, cultural, and economic activities and have unique biophysical characteristics due to continued infrastructure development that generally replaces natural landscapes with built-up structures. The vast majority of studies on urban perturbation of local weather and climate have been centered on the urban heat island (UHI) effect, referring to the higher temperature in cities compared to their natural surroundings. Besides the UHI effect and heat waves, urbanization also impacts atmospheric moisture, wind, boundary layer structure, cloud formation, dispersion of air pollutants, precipitation, and storms. In this review article, we first introduce the datasets and methods used in studying urban areas and their impacts through both observation and modeling and then summarize the scientific insights on the impact of urbanization on various aspects of regional climate and extreme weather based on more than 500 studies. We also highlight the major research gaps and challenges in our understanding of the impacts of urbanization and provide our perspective and recommendations for future research priorities and directions.