The current study aimed to evaluate the use of magnetic resonance imaging (MRI) in the diagnosis of extremity soft tissue tumors and tumor-like abnormalities. This prospective observational study of 71 patients with soft tissue lesionsof extremities was conducted at a tertiary hospital and teaching center in western India after obtaining Institutional Ethical Committee (IEC) clearance. All patients underwent an MRI of the region of interest on Siemens Magnetom Vida 3 Tesla MRI (Erlangen, Germany). MRI findings and diagnosis were correlated clinically and with histopathological examination. A total of 71 patients (49 males and 22 females) in the age group of six to 90 years were included in our study. Out of 44 patients with soft tissue tumors, the most common lesion was neurofibroma (18.1%), followed by lipoma and undifferentiatedsarcoma (9.1% each). Liposarcoma, myxoid liposarcoma, giant cell tumor of the tendon, pigmented villonodular synovitis, and schwannoma were seen in 4.5% of patients each. The soft tissue tumor-like lesions were seen in 27 (38%) patients, the most common being slow-flow vascular malformation, which was seen in 9/27 (33%) patients. The second most common pathology was actinomycosis, seen in four (14.8%) patients. Out of 44 patients with soft tissue tumors, 27 (61.4%) were benign and 17 (38.6%) were malignant.Tumor size of more than 5 cm was more commonly seen in malignant tumors (70.5%) than benign tumors (40.7%). The smooth margin was more common in benign tumors (70.3), while most malignant tumors (70.5%) had irregular or lobulated margins.Heterogenous enhancement was more common in malignant tumors (82.3%) than benign tumors (62.9). The odds of a benign histopathological diagnosis for a tumor suspected to be benign by MRI were 93.75 times higher than the odds of a benign histopathological diagnosis for a tumor suspected to be malignant by MRI. MRI is extremely useful in the evaluation of different soft tissue masses and helps in evaluating the characteristics of the masses, their extent and relationship to surrounding structures, and bone destruction, multiplicity, composition, and enhancement pattern. The systematic imaging analysis approach helps to differentiate a benign lesion from a malignant lesion and also in differentiating various soft tissue tumor mimics.