Abstract: Functional overreaching (FOR) is a common phenomenon in athletic training characterized by a short-term decline in performance and a dual potential: it may both promote adaptation and accumulate fatigue. Under favorable conditions, it can induce supercompensation and enhance performance, but under excessive stress it may progress to non-functional overreaching (NFOR) or overtraining syndrome (OTS). The sports science community has not yet reached a consensus on which outcome this dual nature will produce. This review systematically examines the conceptual definition, physiological characteristics, and diagnostic criteria of FOR, synthesizes conflicting evidence for and against the application of FOR, and evaluates the strengths and limitations of current diagnostic methods. Research indicates that the FOR state elicits an integrated complex physiological stress response, involving changes in multiple systems including cardiovascular function, autonomic nervous regulation, and immune responses. These responses collectively form the intrinsic physiological substrate underlying the dual effects of FOR. Although the “fatigue-adaptation” model supports FOR as a legitimate training strategy to induce supercompensation, a growing body of empirical evidence—particularly from comparative studies of FOR and acutely fatigued (AF) athletes who completed identical training loads—indicates that the performance gains during recovery are often smaller in the FOR group than in the AF group. Meanwhile, despite extensive research on induction-model-based diagnostic criteria for FOR, sport-specific methods tailored to different disciplines require further practical validation. Future research should focus on elucidating the molecular mechanisms underlying the dual effects of FOR, developing a multidimensional comprehensive assessment system, precisely identifying the critical threshold marking the transition from reversible fatigue to irreversible pathological state, and establishing individualized diagnostic and dynamic monitoring protocols tailored to sport-specific characteristics.