This paper presents the study and applications of water jet technology in petroleum engineering. A mathematic model of pressure and water power attenuation, under the condition of submergence and nonfreedom, is setup through experiments. A novel method and its model are established to gain maximum hydraulic power at bottomhole and optimize water parameters. In addition, the basic equation and structure model of two kinds of resonating chamber are set up according to transient flow theory and hydro-acoustics. Under the impact of drilling biaxial stress, a model of predicting the fracture propagation is founded utilizing rock fracture mechanics. On the base of above models and theories, three new kinds of bits, i.e. extended nozzle roller bit, self-resonating water jet bit and combined jet and mechanical rock-cutting bit, are developed. Also, the paper points the prospects of applications of water jet technology in deep-well drilling, low-permeability reservoir production, and enhanced oil production.