Objectives Health literacy is commonly associated with many of the antecedents of health disparities. Yet the precise nature of the relationship between health literacy and disparities remains unclear. A systematic review was conducted to better understand in how far the relationship between health literacy and health disparities has been systematically studied and which potential relationships and pathways have been identified. Methods Five databases, including PubMed/MEDLINE and CINAHL, were searched for peer-reviewed studies. Publications were included in the review when they (1) included a valid measure of health literacy, (2) explicitly conceived a health disparity as related to a social disparity, such as race/ethnicity or education and (3) when results were presented by comparing two or more groups afflicted by a social disparity investigating the effect of health literacy on health outcomes. Two reviewers evaluated each study for inclusion and abstracted relevant information. Findings were ordered according to the disparities identified and the role of health literacy in explaining them. Results 36 studies were included in the final synthesis. Most of the studies investigated racial/ethnic disparities, followed by some few studies that systematically investigated educational disparities. Some evidence was found on the mediating function of health literacy on self-rated health status across racial/ethnic and educational disparities, as well as on the potential effect of health literacy and numeracy on reducing racial/ethnic disparities in medication adherence and understanding of medication intake. Conclusion Overall the evidence on the relationship between health literacy and disparities is still mixed and fairly limited. Studies largely varied with regard to health(-related) outcomes under investigation and the health literacy assessments used. Further, many studies lacked a specific description of the nature of the disparity that was explored and a clear account of possible pathways tested.