Acute exacerbation of idiopathic pulmonary fibrosis (AE-IPF) is a clinical entity defined by rapid deterioration of IPF during the course of the disease that is not due to infections, pulmonary embolism, or heart failure. The condition needs to be differentiated from acute interstitial pneumonia (or Hamman-Rich syndrome), which occurs in patients with no underlying lung disease. The exact etiology and pathogenesis remain unknown, but the condition is characterized by diffuse alveolar damage (on a background of IPF) that probably occurs as a result of a massive lung injury due to some unknown etiologic agent. High-resolution computed tomography can help in prognostication and management of this condition. Once infections and other causes of worsening have been excluded, treatment involves enhanced immunosuppression with pulse doses of methylprednisolone and cytotoxic agents. Our systematic review shows that the outcome, however, is poor, with 1-month and 3-month mortality around 60% and 67%, respectively. Few studies have shown beneficial effects of cyclosporine, pirfenidone, and anticoagulants in the management and prevention of AE-IPF. The etiology, risk factors, pathogenesis, therapy, prognosis, and predictors need to be studied and the potential role of newer agents in the management and prevention of AE-IPF needs to be further clarified.