Peripheral nerve injuries are a common clinical problem. They not only affect the physical capabilities of the injured person due to loss of motor or sensory function but also have a significant impact on psychosocial aspects of life. The aim of this work is to review the interplay of psychosocial factors and peripheral nerve lesions. By reviewing the published literature, we identified several factors to be heavily influenced by peripheral nerve lesions. In addition to psychological factors like pain, depression, catastrophizing and stress, social factors like employment status and worker’s compensation status could be identified to be influenced by peripheral nerve lesions as well as serving as predictors of functional outcome themselves, respectively. This work sheds a light not only on the impact of peripheral nerve lesions on psychosocial aspects of life, but also on the prognostic values of these factors of functional outcome. Interdisciplinary, individualized treatment of patients is required to identify patient at risk for adverse outcomes and provide them with emotional support when adapting to their new life situation.