Research and industrial studies have indicated that small size, low cost, high precision, and ease of integration are vital features that characterize microelectromechanical systems (MEMS) inertial sensors for mass production and diverse applications. In recent times, sensors like MEMS accelerometers and MEMS gyroscopes have been sought in an increased application range such as medical devices for health care to defense and military weapons. An important limitation of MEMS inertial sensors is repeatedly documented as the ease of being influenced by environmental noise from random sources, along with mechanical and electronic artifacts in the underlying systems, and other random noise. Thus, random error processing is essential for proper elimination of artifact signals and improvement of the accuracy and reliability from such sensors. In this paper, a systematic review is carried out by investigating different random error signal processing models that have been recently developed for MEMS inertial sensor precision improvement. For this purpose, an in-depth literature search was performed on several databases viz., Web of Science, IEEE Xplore, Science Direct, and Association for Computing Machinery Digital Library. Forty-nine representative papers that focused on the processing of signals from MEMS accelerometers, MEMS gyroscopes, and MEMS inertial measuring units, published in journal or conference formats, and indexed on the databases within the last 10 years, were downloaded and carefully reviewed. From this literature overview, 30 mainstream algorithms were extracted and categorized into seven groups, which were analyzed to present the contributions, strengths, and weaknesses of the literature. Additionally, a summary of the models developed in the studies was presented, along with their working principles viz., application domain, and the conclusions made in the studies. Finally, the development trend of MEMS inertial sensor technology and its application prospects were presented.