Animal welfare is of increasing importance, with consumers preferring animal products made with ethical practices due to growing awareness. This shift highlights the need for reliable methods to evaluate welfare. This systematic review aims to assess the validity of current animal-based welfare indicators for dairy cows to aid farmers and agricultural professionals in evaluating and improving welfare amidst the lack of a clear legislative definition. The literature search spanned five databases: CAB Direct, PubMed, Scopus, Google Scholar and Livivo, covering publications in English and German from 2011 to 2021. Specific search terms were employed, and abstracts were screened for relevance. Publications were categorized based on exclusion criteria, with a final verification process conducted by three independent scientists. Research highlights correlations between welfare measures, farm characteristics and innovative indicators like hair cortisol concentration. Farming systems and housing methods significantly affect welfare, with pasture-based systems generally resulting in reduced lameness and improved behavior. Proper housing design and management practices are important, as they influence indicators like lameness and cleanliness. Heart rate variability and heart rate monitoring provide insights into dairy cow stress levels during milking and other stressors, making them valuable for welfare assessment. Biomarker research emphasizes the need to balance productivity and health in breeding strategies, as high milk production alone does not indicate good welfare. Behavioral studies and the human-animal relationship are key to understanding welfare. Precision Livestock Farming offers real-time assessment capabilities, although validation is needed. Stress physiology is complex, and while cortisol measurement methods are promising, further research is necessary. Assessment tools like the Animal Needs Index and routine herd data analysis are valuable for identifying welfare concerns. Key findings highlight the WQ® protocol’s effectiveness and versatility, the challenge of its time demands, and the DCF protocol’s promise for more practical and efficient welfare assessments. Commercial animal welfare audits should prioritize easily observable indicators and herd records due to logistical constraints in measuring biomarkers or heart rate variability. This focus on easily accessible indicators, such as body condition score, lameness, claw health, cleanliness, and somatic cell count allows effective welfare assessments, enabling prompt action to enhance wellbeing.