Underwater shock waves generated by pulsed electrical discharges are an effective, economical, and environmentally friendly means of stimulating reservoirs, and this technology has received much attention and intensive research in the past few years. This paper reviews the main results of recent work on underwater electrical wire explosion (UEWE) for reservoir stimulation. A platform is developed for microsecond single-wire explosions in water, and diagnostics based on a voltage probe, current coil, pressure probe, photodiode, and spectrometer are used to characterize the UEWE process and accompanying shock waves. First, the UEWE characteristics under different discharge types are studied and general principles are clarified. Second, the shock-wave generation mechanism is investigated experimentally by interrupting the electrical energy injection into the wire at different stages of the wire-explosion process. It is found that the vaporization process is vital for the formation of shock waves, whereas the energy deposited after voltage collapse has only a limited effect. Furthermore, the relationships between the electrical-circuit and shock-wave parameters are investigated, and an empirical approach is developed for estimating the shock-wave parameters. Third, how the wire material and water state affect the wire-explosion process is studied. To adjust the shock-wave parameters, a promising method concerning energetic material load is proposed and tested. Finally, the fracturing effect of the pulsed-discharge shock waves is discussed, as briefly are some of the difficulties associated with UEWE-based reservoir stimulation.