Inflammation, being a hallmark of many chronic diseases, including cancer, inflammatory bowel disease, rheumatoid arthritis, and chronic kidney disease, negatively affects iron homeostasis, leading to iron retention in macrophages of the mononuclear phagocyte system. Functional iron deficiency is the consequence, leading to anemia of inflammation (AI). Iron deficiency, regardless of anemia, has a detrimental impact on quality of life so that treatment is warranted. Therapeutic strategies include (1) resolution of the underlying disease, (2) iron supplementation, and (3) iron redistribution strategies. Deeper insights into the pathophysiology of AI has led to the development of new therapeutics targeting inflammatory cytokines and the introduction of new iron formulations. Moreover, the discovery that the hormone, hepcidin, plays a key regulatory role in AI has stimulated the development of several therapeutic approaches targeting the function of this peptide. Hence, inflammation-driven hepcidin elevation causes iron retention in cells and tissues. Besides pathophysiological concepts and diagnostic approaches for AI, this review discusses current guidelines for iron replacement therapies with special emphasis on benefits, limitations, and unresolved questions concerning oral versus parenteral iron supplementation in chronic inflammatory diseases. Furthermore, the review explores how therapies aiming at curing the disease underlying AI can also affect anemia and discusses emerging hepcidin antagonizing drugs, which are currently under preclinical or clinical investigation.