To review current knowledge of the Morel-Lavallee lesion (MLL) to help clinicians become familiar with this entity. Familiarization may decrease missed diagnoses and misdiagnoses. It could also help steer the clinician to the proper treatment choice. A search was performed via PubMed and EMBASE from 1966 to July 2013 using the following keywords: Morel-Lavallee lesion, closed degloving injury, concealed degloving injury, Morel-Lavallee effusion, Morel-Lavallee hematoma, posttraumatic pseudocyst, posttraumatic soft tissue cyst. Chinese and English language literatures relevant to the subject were collected. Their references were also reviewed. Morel-Lavallee lesion is a relatively rare condition involving a closed degloving injury. It is characterized by a filled cystic cavity created by separation of the subcutaneous tissue from the underlying fascia. Apart from the classic location over the region of the greater trochanter, MLLs have been described in other parts of the body. The natural history of MLL has not yet been established. The lesion may decrease in volume, remain stable, enlarge progressively or show a recurrent pattern. Diagnosis of MLL was often missed or delayed. Ultrasonography, computed tomography, and magnetic resonance imaging have great value in the diagnosis of MLL. Treatment of MLL has included compression, local aspiration, open debridement, and sclerodesis. No standard treatment has been established. A diagnosis of MLL should be suspected when a soft, fluctuant area of skin or chronic recurrent fluid collection is found in a region exposed to a previous shear injury. Clinicians and radiologists should be aware of both the acute and chronic appearances to make the correct diagnosis. Treatment decisions should base on association with fractures, the condition of the lesion, symptom and desire of the patient.