In the chemical enhanced oil recovery (CEOR) process, the in situ emulsification between the oil displacement agent and crude oil plays an important role in the swept volume enlargement and displacement efficiency improvement. However, as a result of the complex geologic structure of the reservoir and varied remaining oil types, the occurrence of in situ emulsification in the reservoir and its role in enhancing oil recovery (EOR) are still unclear. We summarized and discussed the current understanding and existed problems in the in situ emulsion formation mechanism, its characterization method, and EOR capacity based on the current research results. The field application results were collected to clarify its potential in EOR. It was found that the in situ emulsification had been verified as an important role in oil recovery in both laboratory and pilot tests. However, the preparation and evaluation methods of in situ emulsification exist as a big difference with real conditions, which may cause people to misunderstand its EOR mechanism. The requirement for the in situ emulsification is quite different between the high-and low-permeability reservoirs. We expected that this review and perspective could help people understand the problems in this area. The proposed solution method could also draw some attention, which will promote the application of the in situ emulsification technique.