Materials with high hardness, strength or plasticity have been widely used in the fields of aviation, aerospace, and military, among others. However, the poor machinability of these materials leads to large cutting forces, high cutting temperatures, serious tool wear, and chip adhesion, which affect machining quality. Low-temperature plasma contains a variety of active particles and can effectively adjust material properties, including hardness, strength, ductility, and wettability, significantly improving material machinability. In this paper, we first discuss the mechanisms and applications of low-temperature plasma-assisted machining. After introducing the characteristics, classifications, and action mechanisms of the low-temperature plasma, we describe the effects of the low-temperature plasma on different machining processes of various difficult-to-cut materials. The low-temperature plasma can be classified as hot plasma and cold plasma according to the different equilibrium states. Hot plasma improves material machinability via the thermal softening effect induced by the high temperature, whereas the main mechanisms of the cold plasma can be summarized as chemical reactions to reduce material hardness, the hydrophilization effect to improve surface wettability, and the Rehbinder effect to promote fracture. In addition, hybrid machining methods combining the merits of the low-temperature plasma and other energy fields like ultrasonic vibration, liquid nitrogen, and minimum quantity lubrication are also described and analyzed. Finally, the promising development trends of low-temperature plasma-assisted machining are presented, which include more precise control of the heat-affected zone in hot plasma-assisted machining, cold plasma-assisted polishing of metal materials, and further investigations on the reaction mechanisms between the cold plasma and other materials.