Hydrops fetalis is a critical diagnosis given the poor prognosis and vast differential of potential causes. After a detailed anatomic survey, the first step in differentiating among the various causes is measurement of the middle cerebral artery peak systolic velocity to evaluate for anemia. Anemia is the key decision point in the diagnostic algorithm that categorizes hydrops. This approach is more practical than an immune versus nonimmune classification because it capitalizes on clues available at the time of sonographic diagnosis and expedites care toward possible therapies, such as intrauterine transfusion. The causes of hydrops that share the underlying physiology of fetal anemia include alloimmunization, which accounts for 10% of cases, congenital infections, hemoglobinopathies, and fetomaternal hemorrhage. After ruling out anemia, the differential diagnosis expands to cardiovascular disorders (20%-28% of cases), genetic abnormalities (10%-30% of cases), fetal masses (eg, congenital lung masses, sacrococcygeal teratomas), and monochorionic twin complications. Even after a thorough evaluation, 15% of hydrops cases remain of unknown cause. There are treatments available for select disorders that have the potential to reverse the signs of hydrops. Several imaging pitfalls should be avoided when establishing the diagnosis of hydrops, such as mistaking abdominal wall muscles, physiologic pericardial fluid, or thick subcutaneous tissue as pathologic fluid accumulation. A practical and comprehensive approach to the diagnostic evaluation for hydrops fetalis avoids delays in diagnosis and expedites potential life-saving treatment of this disorder.