Photovoltaic (PV) modules’ efficiency decreases due to the presence of external electrical potentials due to the phenomenon known as potential induced degradation (PID). Powerlines or other external sources can generate this potential, or solar cells themselves can generate it through their electric field. An electric field changes the internal electrical properties of a PV module, which can result in a 30% loss of efficiency. PID can be prevented by designing PV modules to be PID-resistant, or by designing the system to minimize the electric field. Materials such as insulating materials, coatings on PV modules, and shielding materials can achieve this. A literature review is presented here, which analyzes the proposed causes of degradation effects as well as the methodological approaches employed in the test. This article presents and compares studies conducted at the cell, microunit, and module level. Several possible preventive measures are also discussed to prevent PV modules from degrading. In addition, modern mechanisms and techniques for mitigating PID effects were reviewed and discussed. This review discusses the main results and analyzes the simulations adopted by the studies, in addition to providing information about the experiments carried out. For the development of solar technology and to increase its spread in the world, it is crucial to understand how photovoltaic cells degrade and to identify other challenges.