The interfacial stability of gas-liquid two-phase flow is regarded as one of the key issues for ensuring the safe and efficient operation of oil and gas transportation pipelines. The research progress on Kelvin-Helmholtz (K-H) instability induced by gas-liquid shear interaction and the associated interfacial wave evolution characteristics is systematically reviewed in this paper. First, three typical theoretical frameworks for K-H instability, namely the two-fluid model, the Bernoulli equation approach, and the work-based approach, are summarized. Their differences and applicability in mechanism interpretation are compared. Second, the classification systems and evolution characteristics of interfacial waves in stratified and annular flows are reviewed, and the complete dynamic process from two-dimensional waves and three-dimensional waves to roll waves and flow pattern transition is clarified. Furthermore, the dominant mechanisms and regulatory effects of gas and liquid velocities, liquid viscosity, surface tension, and pipe configuration on interfacial wave evolution are analyzed from four perspectives. Finally, based on the limitations of existing studies, future directions are proposed in terms of theoretical model improvement, in-depth investigation of controlling factors, and extension to engineering applications.