Instant foods are widely presented in powder forms across different food segments, which potentially can be formulated with functional or beneficial compounds to provide health benefits. Many reconstituted instant powder foods form colloidal suspensions with complex structures. However, designing instant powder food could be challenging due to the structural complexity and high flexibility in formulation. This review proposed a new classification method for instant powder foods according to the solubility of ingredients and the structure of the reconstituted products. Instant powder foods containing insoluble ingredients are discussed. It summarised challenges and current advances in powder treatments, reconstitution improvement, and influences on food texture and structure to facilitate product design in related industries. The characteristics and incorporation of the main ingredients and ingredients with health benefits in product development were reviewed. Different products vary significantly in the ratios of macronutrients. The macronutrients have limited solubility in water. After being reconstituted by water, the insoluble components are dispersed and swell to form colloidal dispersions with complex structures and textures. Soluble components, which dissolve in the continuous phase, may facilitate the dispersing process or influence the solution environment. The structure of reconstituted products and destabilising factors are discussed. Both particle and molecular structuring strategies have been developed to improve wettability and prevent the formation of lumps and, therefore, to improve reconstitution properties. Various types of instant food have been developed based on healthy or functional ingredients and exhibit positive effects on the prevention of non-communicable diseases and overall health. Less processed materials and by-products are often chosen to enhance the contents of dietary fibre and phenolic compounds. The enrichment of phenolic compounds, dietary fibres and/or probiotics tend to be simultaneous in plant-based products. The process of the ingredients and the formulation of products must be tailored to design the desired structure and to improve the reconstitution property.