Abstract: The low utilization efficiency of nitrogen fertilizer in agricultural ecosystem has caused serious economic and environmental issues. Dicyandiamide (DCD) is a widely used nitrification inhibitor, which can inhibit nitrification via affecting ammonia oxidizing microorganisms with minimal influence on other soil microorganisms, thereby reducing the leaching of nitrate and emission of greenhouse gases. The factors influencing the efficiency of DCD in soil include soil temperature, pH, texture, organic matter, moisture, etc. Recently, the application of molecular methods in agricultural systems has shed new light on the microbial mechanism underlying nitrification inhibition by DCD. In this review, the enzymatic inhibition mechanism, the application effects and their influence factors of DCD were summarized, and the prospects of its application were discussed as well.