Abstract: This paper presents a review of electric propulsion (EP) technology from three main aspects: the taxonomy of EP, the analysis of its application requirements, and the prospects for its future development. In the taxonomy discussion, the necessity of revising the concept and definition of electric propulsion is first elaborated. A four-level classification based on the intrinsic mechanism characteristics of EP is then derived and justified, together with the resulting classification scheme; a complementary classification method based on the extrinsic product characteristics of EP is also proposed. In the analysis of application requirements, the necessity of employing EP in space engineering missions is expounded. Four categories of engineering application requirements are identified—orbit transfer, damping compensation, drag-free control, and attitude control—and the gaps between representative engineering application requirements and the current state of the art of EP are calculated and analyzed. In the outlook on future development, technological innovation in space EP is analyzed and discussed in terms of five innovation modes and their categories. Six future development directions of space EP are proposed: high-specific-impulse EP, high-power EP, drag-free-control EP, long-lifetime EP, commercialized EP, and key EP-related enabling technologies. For each direction, the key technologies that deserve sustained development are recommended.