Lilliputian hallucinations concern hallucinated human, animal or fantasy entities of minute size. Having been famously described by the French psychiatrist Raoul Leroy in 1909, who wrote from personal experience, to date they are mentioned almost routinely in textbooks of psychiatry, albeit with little in-depth knowledge. I therefore systematically reviewed 145 case reports and case series comprising 226 case descriptions, concluding that lilliputian hallucinations are visual (61 %) or multimodal (39 %) in nature. In 97 % of the cases, they are perceived as grounded in the actual environment, thus indicating involvement of higher-level regions of the perceptual network subserving the fusion of sensory and hallucinatory content. Perceptual release and deafferentiation are the most likely underlying mechanisms. Etiology is extremely diverse, with schizophrenia spectrum disorder, alcohol use disorder and loss of vision accounting for 50 % of the cases and neurological disease for 36 %. Recovery was obtained in 62 % of the cases, whereas 18 % of the cases ended in chronicity and 8 % in death. Recommendations are made for clinical practice and future research.