The digital twin of the ocean (DTO) is a groundbreaking concept that uses interactive simulations to improve decision-making and promote sustainability in earth science. The DTO effectively combines ocean observations, artificial intelligence (AI), advanced modeling, and high-performance computing to unite digital replicas, forecasting, and what-if scenario simulations of the ocean systems. However, there are several challenges to overcome in achieving the DTO's objectives, including the integration of heterogeneous data with multiple coordinate systems, multidimensional data analysis, feature extraction, high-fidelity scene modeling, and interactive virtual-real feedback. Hypercomplex signal processing offers a promising solution to these challenges, and this study provides a comprehensive overview of its application in DTO development. We investigate a range of techniques, including geometric algebra, quaternion signal processing, Clifford signal processing, and hypercomplex machine learning, as the theoretical foundation for hypercomplex signal processing in the DTO. We also review the various application aspects of the DTO that can benefit from hypercomplex signal processing, such as data representation and information fusion, feature extraction and pattern recognition, and intelligent process simulation and forecasting, as well as visualization and interactive virtual-real feedback. Our research demonstrates that hypercomplex signal processing provides innovative solutions for DTO advancement and resolving scientific challenges in oceanography and broader earth science.