Proximal fibular osteotomy has been proposed as a simple and inexpensive alternative to high-tibial osteotomy and unicondylar knee arthroplasty and may be useful for low-income populations that cannot afford expensive treatment methods. However, there is no consensus existing regarding the mechanism by which it acts nor the outcome of this procedure. This study was performed to analyze the available evidence on the benefits of proximal fibular osteotomy and to understand the possible mechanisms in play. There are various mechanisms that are proposed to individually or collectively contribute to the outcomes of this procedure, and include the theory of non-uniform settlement, the too-many cortices theory, slippage phenomenon, the concept of competition of muscles, dynamic fibular distalization theory and ground reaction vector readjustment theory. The mechanisms have been discussed and future directions in research have been proposed. The current literature, which mostly consists of case series, suggests the usefulness of the procedure in decreasing varus deformity as well as improving symptoms in medial osteoarthritis. However, large randomised controlled trials with long-term follow-up are required to establish the benefits of this procedure over other established treatment methods.