Amniotic fluid embolism (AFE) is a rare, yet life-threatening obstetric emergency characterised by sudden collapse of the mother due to circulatory and respiratory failure, often accompanied by coagulopathy. It accounts for a significant proportion of peripartum cardiac arrests and maternal deaths, with an incidence of 2–8 per 100,000 deliveries. The specific pathophysiology behind AFE remains unclear. However, one hypothesis states that amniotic fluid or fetal debris enters the maternal circulation, triggering a severe inflammatory and immunologic response. Diagnosis of AFE is primarily clinical as it relies on exclusion due to the unavailability of any definitive diagnostic test. Risk factors include caesarean delivery, multiple pregnancies, advanced maternal age, and pre-existing health conditions or comorbidities. Effective management centres on early recognition, aggressive, urgent supportive measures, and resuscitation. Advanced therapeutic options, such as veno-arterial extracorporeal membrane oxygenation (VA-ECMO), have shown potential in severe cases. Despite medical advancements in supportive care, which have led to reduced mortality rates, AFE remains highly unpredictable, carrying a significant risk of maternal and fetal mortality and morbidity. Survivors are often faced with long-term complications such as neurological deficits and cardiac problems. This comprehensive review aims to improve clinicians’ awareness of AFE, summarize its risk factors, and provide an overview of the current strategies for early recognition and management, emphasizing recent advancements and the need for continued research in this critical area.