Diclofenac, a widely prescribed nonsteroidal anti-inflammatory drug (NSAID), remains one of the most commonly used analgesics and anti-inflammatory medications worldwide. Despite its therapeutic efficacy, diclofenac is associated with a spectrum of adverse drug reactions (ADRs) ranging from common gastrointestinal and cardiovascular effects to rare but serious complications, including cutaneous hyperpigmentation and Nicolau syndrome. This comprehensive review examines the drug profile, mechanism of action, pharmacokinetics, and detailed analysis of reported ADRs. Special attention is given to uncommon but clinically significant reactions such as Nicolau syndrome following intramuscular administration and drug-induced hyperpigmentation. The review provides evidence-based management strategies, risk factor identification, and monitoring protocols essential for safe clinical practice. Through systematic analysis of clinical trials, case reports, and pharmacovigilance data, this review highlights the importance of appropriate patient selection, route optimization, and vigilant monitoring in minimizing diclofenac-associated morbidity.