The iron and steel industry is one of the largest contributors to U.S. and global greenhouse gas emissions. Hydrogen can act as a promising reducing agent and clean energy carrier to decarbonize this sector, and has received significant attention in terms of process modelling, techno-economic analysis, and life cycle assessment in recent years. Policy incentives, hydrogen storage and transportation, and water stress levels are key factors that require significantly more consideration in order to realize hydrogen’s potential to decarbonize this industry. This review demonstrates the need for a systematic understanding and critical assessment of these areas, and their profound impacts on the decarbonization of the iron and steel sector. Furthermore, hydrogen and water supply face competition from other hard-to-decarbonize sectors, which should be considered on national and regional levels. Lastly, future research should also consider the impact of other environmental factors and hydrogen leak when deploying hydrogen at scale for industrial decarbonization.