Metal halide perovskites have attracted considerable interest for their potential applications in high‐definition displays owing to their narrowband emission, wide color gamut (≈140%), near‐unity photoluminescence efficiency, and cost‐effective solution processability. Extensive efforts have led to the external quantum efficiency of state‐of‐the‐art perovskite light‐emitting diodes (PeLEDs) to exceed 20%. However, there are several obstacles, such as poor working stability, low efficiency, and low luminance, of pure‐blue and pure‐red light‐emitting devices that delay their commercial application. Addressing these issues requires a deep understanding of the photoluminescence effect as well as the bottlenecks in the process. Here, the fundamental working principle, carrier recombination, and light outcoupling properties of PeLEDs are described. The performance improvement strategies of PeLEDs based on defect engineering, perovskite crystallization, charge injection balancing, and quantum confinement are discussed. Furthermore, the challenges of PeLEDs in pure‐color light emission, working stability, and toxicity are reviewed and discussed.