Single, best response, multiple choice questions (MCQs) with 4 options (3 distractors and 1 correct answer) or 5 options (4 distractors) have been widely used as an assessment tool in medical education in India and globally. Writing plausible distractors is time consuming and the most difficult part of preparing MCQs. If the number of options can be reduced to 3, it will make preparing MCQs less difficult and time consuming, thus reducing the likelihood of flaws in writing MCQs. We reviewed the literature to find out if the number of options in MCQ test items could be reduced to 3 without affecting the quality of the test. A systematic database search was done using the following question as a framework: How many options are optimal for multiple choice questions? Theoretical, analytical and empirical studies, which addressed this issue, were included in the review. There was no significant change in the psychometric properties of the 3 options test when compared with 4 and 5 options. MCQs with 3 options improved the efficiency of the test as well as its administration compared with 4- or 5-option MCQs. MCQs with 3 options had a higher efficiency because fewer distractors needed to be prepared, took up less space and required less reading time, decreased the time required to develop the items and the time to administer, and more items could be administered in a given time thus increasing the content sampled. Our review of the literature suggests that MCQs with 3 options provide a similar quality of test as that with 4- or 5-option MCQs. We suggest that MCQs with 3 options should be preferred.