Urban agriculture (UA) contributes to food security, urban greening, and climate adaptation, yet its microclimatic and hydrological roles remain underexplored in cities worldwide. Thermal remote sensing provides critical insights into surface energy dynamics, evapotranspiration (ET), and localized cooling, with NASA’s ECOSTRESS mission offering unprecedented high-resolution measurements of land surface temperature (LST) and ET. This systematic review examines peer-reviewed studies published for decades that employ thermal remote sensing, with a focus on ECOSTRESS, to evaluate the cooling benefits and water demand of UA. Guided by PRISMA 2020 protocols, we identified and synthesized studies across Web of Science, Scopus, and AGRICOLA. The review classifies findings by geographic region, spatial resolution, crop type, and methodological approach, highlighting advances in modeling ET for irrigation management and quantifying UA’s contribution to mitigating the urban heat island effect. Evidence shows UA can lower localized LST by 1–5°C and that ECOSTRESS-derived ET provides robust estimates for optimizing irrigation. However, gaps remain in validation methods, integration with socio-economic dimensions, and multi-climate assessments. This review highlights the potential of thermal remote sensing, particularly ECOSTRESS, in guiding sustainable UA planning, water governance, and climate-resilient urban design.