Forest restoration aims to increase forest cover, structure, function, and/or species composition, and it influences hydrology through the partitioning of precipitation into evapotranspiration and streamflow. This paper provides a conceptual framework for forest restoration and hydrology, reviews the literature on forest hydrology that is relevant to forest restoration, and assesses practical forest restoration approaches, their hydrologic effects, and tradeoffs. The hydrologic effects of three types of forest are assessed: mature and old-growth forests, which often are the reference model for restoration; managed forest plantations, which dominated early efforts for forest restoration; and the early stages of native forest succession, an increasingly popular, ecologically-oriented or nature-based approach to forest restoration. This review indicates that mature and old-growth forests have high evapotranspiration and consistent water yield, provided by moderated peak discharges and sustained low flows, while water yield is low from managed forest plantations, especially during dry periods. The early stages of native forest succession may provide greater water yield and increased low flows compared with managed plantations. Inclusion of native species and natural processes in forest restoration can increase some hydrological benefits relative to other forest restoration approaches. Although forest restoration affects hydrology, few studies examine the hydrologic effects of specific forest restoration practices such as choice of species, silvicultural practices, legacies of past land use, and geographic setting. Forest managers and ecologists can play valuable roles by designing studies that explore the hydrologic effects of forest restoration approaches on time scales relevant to ecological succession and forest management under a changing climate.