This paper presents a comprehensive analysis on the operating performance of three-phase Induction Motors (IMs) driven by unbalanced supply voltages. It is a well known fact that three-phase IMs are adversely affected by the presence of unbalanced supply voltages and it is required to derate the output power wisely for efficient and safer operation of the motor. There is a certain guidance given in NEMA MG1-1993 to decide a suitable derating level, however limitations and drawbacks of such practices have been identified. Although voltage unbalance is a well-defined concept, existence of numerous voltage unbalance conditions have led to problematic prediction of IM performance in terms of temperature rise and motor derating. Thus, different study approaches, their findings, limitations and shortcomings are critically reviewed in this paper in order to develop a comprehensive derating mechanism for three-phase IMs.