There has been great debate concerning the existence and meaning of compensation neurosis. It is included in the International Classification of Diseases (ICD)-9 and -10 but not listed in the Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, Text Revision (DSM-IV-TR). On the eve of publication of the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition (DSM-5), we re-examine the history and concept of compensation neurosis and conceptually update the condition to reflect current psychiatric thought. We consider its utility as a diagnostic entity for forensic evaluations and its components as they relate to exaggeration in injury claims. We also discuss how compensation neurosis differs from malingering and factitious disorder.