Iliopsoas bursitis is known to occur in relation to hip joint lesions such as osteoarthritis, rheumatoid arthritis, synovial chondromatosis, pigmented villonodular synovitis and rarely osteonecrosis of the femoral head, but femoral nerve palsy due to iliopsoas bursitis is a very rare condition. A patient visited to the emergency room because of anesthesia of the anterior thigh. A mass had developed and this enlarged to 3x5 cm in size after 2 weeks, and this was probably due to progression of osteonecrosis of the femoral head. The patient was finally diagnosed with femoral nerve palsy that was caused by a distended iliopsoas bursa, which was detected by ultrasonography and enhanced MRI. Total hip arthroplasty via the posterior approach was done and the connected iliopsoas bursa was removed. After operation, the anesthesia of the anterior thigh and the motor power were improved. We report here on a case of femoral nerve palsy due to iliopsoas bursitis that was related to osteonecrosis of the femoral head, and we review the relevant medical literature.