Although knee dislocations are relatively rare, serious complications make treatment difficult. Common peroneal nerve (CPN) palsy is a debilitating complication and its incidence has been reported as high as 50%. Even after successful ligament construction, unresolved CPN palsy is a major factor contributing to poor outcomes after knee dislocations. CPN palsy is more common with open dislocations, rotatory dislocations, and especially occurs in patients with posterolateral corner injuries. CPN palsy can be readily diagnosed clinically, although a high index of suspicion is needed. The risk versus benefits of surgical exploration in the acute setting is still under debate. Conservative management can be appropriate in the early phase of treatment, however, for persistent nerve damage, surgery is the treatment of choice because it results in better functional outcomes. Neurolysis, primary nerve repair, nerve grafting, and posterior tibialis tendon transfer have all been used by surgeons as viable surgical treatment options. As late surgical treatment of CPN typically results in poor prognosis, awareness of this injury, thorough physical examination and documentation of the nerve injury, and close follow-up are of paramount importance.