The incidence of atopic dermatitis is increasing, and this poses a major burden on health care costs. A precise understanding of the genetic and immunologic mechanisms is crucial for development of effective treatment strategies for atopic dermatitis. Various studies indicate that it has a multifactorial cause, with activation of complex immunologic and inflammatory pathways. The current review will examine recent advances that have been made in our understanding of the genetic and pathophysiologic prerequisites that form the basis of this common recalcitrant skin disorder.