The spatial mismatch hypothesis has been an important theoretical base in western study of urban geography and urban planning. Since its proposal in the 1960s, it has stimulated a great volume of empirical studies on measuring and demonstrating the mismatch of job and housing opportunities in western cities. Similar phenomena of urban spatial restructuring and home-work separation in Chinese cities have also attracted increasing attention from scholars. This article presents a critical review of the spatial mismatch study in western countries, starting with an overview of its basic hypothesis and empirical research. We argue that John Kain proposed the spatial mismatch hypothesis in 1969 to highlight adverse impacts of urban spatial restructuring in the 1950s and 1960s in urban labor market. Specifically, the hypothesis states that employment decentralization and housing segregation have led to a mismatch among appropriate jobs available in inner-city neighborhoods where most black residents lived, hence resulting in higher unemployment, lower wages, and longer commuting of inner-city black residents. While many empirical researches focus on racial segregation and inequality in labor and housing markets, recent studies suggest a broader view of spatial inequality experienced by disadvantaged people such as women and low-income people. Then the paper discusses key methodological progress and challenges in spatial mismatch research. We argue that, spatial mismatch highlights the requirement for urban geographers to pay attention to the extent of spatial inequality during the large-scale institutional and spatial restructuring in cities, as well as its adverse impacts on job and housing experience of disadvantaged people such as low-income households.