The treatment of postmenopausal women with a variety of androgen formulations is increasing, despite the lack of clear guidelines regarding the diagnosis of androgen insufficiency. This review summarizes evidence on the efficacy and safety of adding testosterone to hormone therapy in postmenopausal women. Fair to good evidence exists that the use of testosterone in combination with hormone therapy has both benefits and risks. The benefits are an improvement in sexual function with various regimens of testosterone use (good evidence), an improved sense of well-being with transdermal testosterone (fair evidence), and a reduction in triglyceride levels with methyl testosterone (fair evidence). The most consistent risk is a reduction in high-density lipoprotein (HDL) cholesterol, particularly with methyl testosterone (good evidence). There has been insufficient reporting of other side effects; hence, testosterone therapy should be used with caution. The use of testosterone may be justified in specific clinical circumstances and should be limited to short-term use; long-term studies are not available. Close surveillance for HDL cholesterol and other side effects is necessary.