Background: Despite the lack of approved testosterone formulations for women in most countries, testosterone therapy is still being offered to women worldwide. Aging and loss of ovarian or adrenal function, among others, can lower testosterone levels in women. However, international guidelines currently do not routinely recommend androgen replacement therapy due to lack of long-term safety data. Evidence on its benefits and risks still remains uncertain. Objectives: The aim of this literature review is to present current studies and guidelines that examined the effects of testosterone therapy for postmenopausal women, including its role on cognition and mood; breast and endometrial cancer risks; musculoskeletal, cardiovascular, and genitourinary health; and sexual function. Methodology: A review of literature was done using PubMed, EMBASE, Science Direct, OVID, and Google scholar, with the following key words: androgen, testosterone, menopause, and hypoactive sexual desire dysfunction. We identified reviews, clinical trials, and guidelines. The population was limited to postmenopausal women. Results: There is no evidence from current published literature to support the use of testosterone therapy for female well-being, mood and cognition, bone and cardiovascular health. Intravaginal testosterone appears to be a promising alternative for the treatment of genitourinary symptoms of menopause (GSM) but efficacy and safety are yet to be confirmed. Well-designed, randomized, and placebo-controlled trials are needed to establish long-term safety, efficacy, and appropriate dosing and route of testosterone therapy in postmenopausal women. The only evidence-based indication for testosterone therapy in women is for the treatment of postmenopausal hypoactive sexual desire disorder (HSDD). Should a trial of testosterone therapy be given for HSDD, the transdermal route is the preferred method of delivery. Baseline total testosterone concentration should be determined before starting treatment, and repeated after 3–6 months. Serum testosterone levels should be monitored at regular intervals to avoid supraphysiologic dosing. Conclusion: Currently, there is no robust evidence to support the use of exogenous testosterone to improve female well-being, musculoskeletal health, mood and cognition, as well as bone and cardiovascular health among postmenopausal women. The only evidence-based indication for testosterone therapy in women is the treatment of postmenopausal hypoactive sexual desire disorder, but only after all other causes of sexual dysfunction have been ruled out. To date, testosterone therapy has no US Food and Drug Administration (US FDA) approval due to the lack of long-term efficacy and safety data.