Isolated posterior interosseous nerve palsy is an uncommon condition and its management is controversial. Existing literature is sparse and a treatment algorithm based on existing best evidence is absent. A comprehensive review was undertaken to elucidate the causes of spontaneous posterior interosseous nerve palsy and suggest a management strategy based on the current evidence. Posterior interosseous nerve palsy can be broadly categorized as compressive and non-compressive, and the existing evidence supports surgical intervention for compressive palsy. For posterior interosseous nerve pathology with no compressive lesion on imaging, conservative management should be tried first. Surgery is therefore reserved for compressive lesions and for failure of conservative management. The commonly performed operative procedures include decompression and neurolysis, neurorrhaphy and nerve grafting, and tendon transfers with or without nerve grafting performed as a salvage procedure. The prognosis is poorer in patients aged > 50 years, those with a delay to surgery, and those who have had long-standing compression with severe fascicular thinning.