The complexity of process flows, prolonged construction periods, and economic challenges in underground engineering have hindered the development of smarter, greener, and safer construction techniques. Prefabricated construction technology offers a promising solution with its high level of intelligence, efficiency, and improved working conditions. A review of its research and application status in underground engineering, domestically and internationally, indicates significant advancements in utility tunnels, metro stations, and shield tunneling. However, drill-and-blast railway tunnels face limitations such as fragmented design theories, lack of standardization, and inadequate economic evaluations. This study focuses on four critical aspects, namely structural system design, joint mechanical performance testing, construction and assembly techniques, and engineering application with performance monitoring. The study yields the following findings: (1) A standardized modular design for drill-and-blast tunnel linings, inverts, and open-cut structures is developed, with finite element simulations confirming compliance with safety thresholds. (2) Experimental tests on flat, mortise and tenon, and various bolted connections (including straight, curved, oblique, and bolt-free variants) reveal that curved bolts provide the best balance between structural integrity and assembly efficiency. (3) Customized mechanical equipment is essential for ensuring the precise and efficient assembly of prefabricated structures in drill-and-blast tunnels, with leveling cushion layers recommended to ensure invert alignment accuracy. (4) Field tests confirm that prefabricated inverts maintain structural stability under dynamic loads ranging from 5 to 20 Hz, enduring 4 million fatigue cycles. Furthermore, mortise-groove interlocking combined with fluid-inflated strip seals ensures watertight performance in open-cut structures.