Background: Diminished Reality (DR) is an emerging technology that removes objects from a user's visual field. Existing research focuses on advancing and implementing the technology but lacks a comprehensive investigation of how the technology may influence the user’s cognitive functions, task performance, and safety. Objectives: The current literature review examined the existing research investigating various DR applications and potentially beneficial and detrimental effects of DR on the user’s cognition. Findings: Despite the limited empirical research investigating the implementation of DR, the literature suggests that DR may have benefits for various tasks and environments. There is a critical lack of research investigating the impact of DR on a broad range of cognitive functions. Still, the existing literature suggests there could be both positive and negative effects of DR on the user’s cognitive performance. Implications: DR possesses the potential for seamless integration across various technology domains, including training, virtual meetings, comfort, and safety. With its potential benefits, there is a critical need to address the precise pitfalls of DR, including substantial safety concerns. The current findings provide valuable insights that can guide and inform future research endeavors in the realm of DR.