Laser melting deposition (LMD) is a typical additive manufacturing technology. Compared to the traditional forming processes, it has a series of features, such as shorter processing cycle, flexible design, higher dimensional accuracy, and environmental protection. Gradient functional material (FGM) is an advanced functional material without obvious interface inside, and the composition and performance graded distribution along thickness. Among the manufacturing method of FGM, LMD not only relieves the stress between different materials, but also ensures the excellent formability of the material, and controls the change and distribution of the microstructure and properties of the formed parts through flexible design. This paper introduces the technical characteristics of LMD, the characteristic and application of FGM, the research progress in manufacturing FGM by LMD at home and abroad, the current research status of team in this field, and the development prospects of the LMD technology for the manufacture of FGM.