Evidence shows that erythema toxicum neonatorum (ETN) has been described in the literature since the 15th decade as a primarily rash in pediatric patients. Clinical studies show that the lesion of ETN is mainly characterized by the presence of minute yellowish papules and pustules that are usually surrounded by an irregular reddish wheal. It should be noted that evidence also demonstrated the pathology of these lesions is temporary and usually disappears within a few hours. In the present literature review, we discussed the etiology, prevalence, risk factors, and clinical signs of ETN based on findings from relevant research. The etiology of ETN is not clear among the different studies. However, some studies show involvement of immune and potential allergic reactions. The prevalence of the condition among infants is also remarkably variable among the relevant studies worldwide. There is also inconsistency in reporting the significance of the risk factors related to the prevalence and severity of the condition. On the other hand, the clinical signs among studies seem to be consistent and easily detected except when evaluating dark-skinned infants. Further studies are needed better to understand the etiology and epidemiology of the condition.