H3 subtype avian influenza virus (AIV) is one of the most widely distributed and frequently detected low-pathogenicity avian influenza viruses (LPAIVs) in wild birds and poultry worldwide. Wild waterfowl are the natural reservoir of this virus. In recent years, driven by frequent genetic reassortment and continuous evolution, H3 subtype AIV has expanded its host range to include various mammalian species—dogs, cats, horses, seals, pigs (experimental infection), and humans. Among these, the H3N8 subtype shows the broadest cross-species transmissibility, having established sustained transmission lineages in horses and dogs, while also causing sporadic infections in seals and humans. Avian-origin H3N2 canine influenza virus has circulated stably in dog populations across Asia and North America for nearly two decades. Between 2022 and 2023, China reported three human cases of H3N8 subtype AIV infection, one of which was fatal (Guangdong, March 2023), indicating that this virus poses a potential zoonotic transmission risk. Novel triple-reassortant strains, including genotype G25 of H3N8 and H3N3, first detected in chicken flocks in late 2022, have continued to emerge. Their HA genes originate from H3 subtype viruses of wild bird or chicken origin, whereas their internal gene segments are predominantly acquired from H9N2 subtype AIV, resulting in enhanced mammalian adaptability. This review summarizes the global epidemiology of H3 subtype AIV (covering wild birds, poultry, and live poultry markets), its genetic evolution and reassortment patterns, and the molecular mechanisms underlying cross-species transmission. This review particularly highlights the regulatory roles of key amino acid mutations—such as PB2-D701N, M1-M192V, and HA-Q226L/G228S—in receptor binding preference, polymerase activity, and pathogenicity. This review also summarizes recent advances in detection techniques (multiplex RT-PCR, quantum dot-based immunochromatographic strips, RT-RAA, and CRISPR-Cas13a) and vaccine development (inactivated, adenovirus-vectored, and mRNA vaccines). Key prevention and control challenges—including covert circulation, surveillance gaps, and limited subtyping diagnostic capacity at primary laboratories—are also discussed. This review proposes that H3 subtype AIV should be recognized as a potential zoonotic threat warranting continued surveillance, although no evidence of sustained human-to-human transmission has been documented to date. Better understanding of cross-species mechanisms, stronger surveillance and early warning, and evidence-based control strategies are needed to inform future risk assessment.