Visual hallucinations (VH) are a common symptom in multiple clinical and non-clinical populations. Although structural and functional neuroimaging has informed the understanding of VH, temporal resolution is limited. Electrophysiological techniques provide a complementary perspective on dynamic and temporal aspects of neural functioning, offering greater insight into the mechanisms underlying their formation. In this review we examine and critically evaluate the emerging evidence base utilising electrophysiological approaches in the study of VH. Overall, increased visual system excitability, dysfunctional visual processing and network connectivity, and cholinergic dysfunction have been consistently observed in VH-prone pathologies. However, a major limitation is in the lack of robust experimental studies and the reliance on single case reports. We conclude that electrophysiology provides tentative evidence for the contribution of bottom-up, top-down, and network dysfunction in the aetiology of VH, supporting several existing VH models. Furthermore, we discuss how electrophysiology has been directly utilised in specific clinical interventions for VH. Further exploration utilising electrophysiology in combination with, for example, neuroimaging will help better understand VH aetiology while aiding in the development of novel therapeutic interventions for this difficult to treat symptom.