Extramedullary disease (EMD) in multiple myeloma (MM) represents a distinct clinical entity associated with poor prognosis, therapeutic resistance, and aggressive behavior. EMD can occur at diagnosis or during relapses, either contiguous with bone lesions or as soft tissue plasmacytomas due to hematogenous spread. This review outlines the current understanding of EMD pathophysiology, diagnostic challenges, and therapeutic approaches. The review differentiates between bone-related and non-bone-related EMD, highlighting their prognostic implications. Diagnostic strategies rely on advanced imaging modalities, including PET-CT and MRI, and require histopathological confirmation through biopsy and immunohistochemistry. Management includes local therapies, primarily radiotherapy and, in selected cases, surgery, alongside systemic treatments involving proteasome inhibitors, immunomodulatory drugs, and monoclonal antibodies. New emerging therapies, such as chimeric antigen receptor T cells (CAR-T) and bispecific antibodies, are under evaluation for the treatment of relapsed/refractory EMD. Autologous stem cell transplantation is recommended for eligible patients, with tandem procedures considered in high-risk cases. The role of minimal residual disease (MRD) monitoring is emphasized, employing next-generation sequencing (NGS), flow cytometry, and imaging, with MRD negativity serving as a surrogate marker for treatment efficacy and survival prediction. Despite therapeutic advances, the prognosis for patients with EMD remains unfavorable. The review underscores the necessity of a multidisciplinary approach for accurate diagnosis, individualized treatment, and consistent monitoring. Recognizing EMD as a high-risk MM variant mandates the integration of novel diagnostics and therapies. Future clinical trials must incorporate EMD-specific endpoints to optimize treatment and improve outcomes.