Abstract: The vehicle-to-everything (V2X) network has the potential to revolutionize the way we interact with vehicles and the surrounding. By utilizing innovative information and communication technologies, V2X networks can connect human beings, vehicles, roadside units, and even the cloud. In the near future, beyond 5G (B5G) and 6G technologies will enable the next-generation V2X networks to achieve superior communication and sensing capabilities, which is expected to offer advanced technologies such as intelligent driving and transportation. However, the strong Doppler effects arising from the high mobility of vehicles may lead to significant inter-carrier interference and pilot overheads in the existing orthogonal frequency division multiplexing (OFDM) systems, particularly as the millimeter wave and terahertz technologies dominate the B5G/6G era. In recent years, orthogonal time frequency space (OTFS) techniques have attracted attention owing to their ability to resist doubly-selective fading. In addition, the integrated sensing and communication (ISAC) based on OTFS (OTFS-ISAC) has emerged as a promising approach for V2X networks. In this context, our objective is to investigate the system structure, application and challenges of OTFS-ISAC in V2X networks, along with the related key techniques such as frame structure, pilot design and signal processing. First, we will explore the structures and fundamental theories of OTFS-ISAC systems, followed by the evaluation of communication and sensing performance. In particular, we will investigate the system architecture of OTFS-ISAC in monostatic and bistatic radar modes, respectively. Secondly, we will provide an overview of the state-of-the-art of OTFS techniques and further discuss the challenges and key techniques of OTFS-ISAC concerning the frame structure in the physical layer, pilot mechanism design, communication and radar signal analyses, etc. Finally, we will examine the case studies of OTFS-ISAC utilization in V2X networks to address corresponding major issues such as the inadequacy of Doppler resolution, low overhead beam scanning and target detection, and cooperative resource management. The ISAC system is in developmental stages, and this is the first comprehensive review that investigates the OTFS-ISAC system in detail. Although OTFS-ISAC offers significant advantages over OFDM-enabled ISAC in V2X characterized by high mobility, it faces numerous challenges in practical applications, including the well-known fractional Doppler effect and high peak-to-average ratio. However, with continuous development and technological advancements, it is anticipated that the OTFS-ISAC system will gain wide acceptance.