Xanthogranuloma of the sellar region is a rare chronic inflammatory lesion resulting from secondary hemorrhage, inflammation, infarction, and necrosis of an existing Rathke’s cleft cyst, craniopharyngioma, or pituitary adenoma. Sellar xanthogranulomas are challenging to differentiate from other cystic lesions preoperatively due to the lack of characteristic imaging features. We performed a literature overview of the clinical and paraclinical features, treatment options, and long-term outcomes of patients with sellar xanthogranuloma, focusing on the preoperative radiological diagnosis. The hyperintense signal in both T1- and T2-weighted sequences, cystic or partially cystic morphology, ovoid shape, sellar epicenter, intra- and suprasellar location, intratumoral calcifications, linear rim contrast enhancement, and the absence of cavernous sinus invasion suggest xanthogranuloma in the preoperative differential diagnosis. An endoscopic endonasal gross total resection without radiotherapy is the preferred first-line treatment. Given the low rate of recurrence rate and low chance of endocrinological recovery, a mass reduction with decompression of the optic apparatus may represent an appropriate surgical goal. Identifying the xanthogranulomas’ mutational profile could complement histopathological diagnosis and give insight into their histo-pathogenesis. A better preoperative neuroimagistic diagnosis of sellar xanthogranulomas and differentiation from lesions with a poorer prognosis, such as craniopharyngioma, would result in an optimal personalized surgical approach.