Visits to Emergency Departments (ED) in the United States are increasing, creating a crowding problem, including longer length of stay in the ED (EDLOS) and worse outcomes. Many ED resort to observational units (EDOU) to help alleviate this crowding issue. This narrative review assessed the current state of literature to investigate the benefits of EDOU while reviewing the barriers to create such units. : This review utilized the Patient Intervention Control Outcome (PICO) format. The searches were performed on PubMed from its inception to 14 November 2024. The outcomes were EDLOS, hospital admission rates, and 7-day ED return rates. Any randomized trials or observational studies (either retrospective or prospective) that reported pre-EDOUs and post-EDOUs, or studies comparing patients in the EDOUs versus control were eligible. We excluded abstracts and non-original studies. : Our search identified 904 results, and we included 34 articles in this review. Four studies reported EDLOS with an average of 14-23 h. Two studies performed a comparison analysis and found a decreases in EDLOS between 23 and 28%, while two studies discovered no significant difference. Four studies reported a statistically significant reduction in hospital admission rates, with absolute reductions in rates ranging from 2.7% to 44%. Two studies found no significant difference. Both EDLOS and rates of hospital admission were more impactful when EDOU focused on a single chief complaint or narrowed criteria. Only three studies commented on 7-day ED return rate, reporting ranges from 1.9% of patients returning in 72 h, and 10.8% returning within 14 days. Additionally, they identified that 53.3% of potentially avoidable visits occurred within 48 h of discharge, and the majority of returns were related to original chief complaints. : The Observation Units for Emergency Departments offer many benefits such as potential reduction in EDLOS and hospital admissions. However, the implementation of EDOUs usually comes with high initial costs, which hinders the process. Thus, more studies with robust methodology are still needed to assess the intricacies of these benefits of the EDOUs.