With the significant progress of urbanization, cities and towns are suffering from air pollution, heat island effects, and other environmental problems. Urban vegetation, especially trees, plays a significant role in solving these ecological problems. To maximize services provided by vegetation, urban tree species should be properly selected and optimally arranged. Therefore, accurate classification of tree species in urban environments has become a major issue. In this paper, we reviewed the potential of light detection and ranging (LiDAR) data to improve the accuracy of urban tree species classification. In detail, we reviewed the studies using LiDAR data in urban tree species mapping, especially studies where LiDAR data was fused with optical imagery, through classification accuracy comparison, general workflow extraction, and discussion and summarizing of the specific contribution of LiDAR. It is concluded that combining LiDAR data in urban tree species identification could achieve better classification accuracy than using either dataset individually, and that such improvements are mainly due to finer segmentation, shadowing effect reduction, and refinement of classification rules based on LiDAR. Furthermore, some suggestions are given to improve the classification accuracy on a finer and larger species level, while also aiming to maintain classification costs.