There are an increasing number of crude oil fields that are now producing both crude oil and water emulsions; such fields are both onshore and offshore. These emulsions are formed during oil exploitation due to the presence of natural surfactants, such as asphaltenes and resins. These molecules strongly stabilize the water/oil interface and prevent coalescence of water droplets. As water/oil phase separation is necessary before oil transportation and refining, demulsifiers are used to break water-in-oil emulsions. This review presents the crude oil emulsion formation, factors affecting demulsification of crude oil emulsion such as demulsifier chemical structure, water content, partition coefficient (KP), and demulsifier concentration. This review also covers the kinetics and mechanism of the demulsification process.