Neuroma formation occurs because of some degree of nerve injury followed by improper intrinsic nerve repair. The cause of neuroma pain is incompletely understood, but appears to be multifactorial in nature, including local and system changes. A comprehensive understanding of nerve anatomy, injury, and repair techniques should be used when dealing with neuroma formation and its physical manifestations. Diagnosis of neuroma is clinically characterized by pain associated with scar, altered sensation within the given nerve distribution, and a Tinel sign. The pathophysiology of neuroma formation is reviewed.