Photochromic material, as an adaptive smart material, has a wide range of applications in smart windows, photoelectric sensors, optical storage, etc. Oxygen-containing rare-earth metal hydride (REH_xO_y) film, a new type of photochromic material, has attracted the attention of researchers for its efficient and reversible color-changing properties, simple and reproducible preparation methods, and fast darkening-bleaching time. In this paper we review the current research status of structural composition, color change mechanism, and property modulation of oxygen-containing rare-earth metal hydride films. Exposure to visible light and ultraviolet (UV) light can lead the optical transmission of visible and infrared (IR) light to degrade. The photochromic mechanisms can be grouped into four mechanisms: lattice contraction mechanism, oxygen exchange mechanism, local metal phase change, and hydrogen migration mechanism. Currently, performance can be tuned by controlling film morphology, designing chemical components, improving substrate adaptation, multilayer film structure design, etc. Finally, the future research focus of thin film is prospected.