Atopic dermatitis (AD) is a chronic inflammatory skin disease that is often associated with the development of food allergy and asthma. New insights into AD reveals an important role for structural abnormalities in the epidermis resulting in a leaky epithelial barrier as well as chronic immune activation that contribute to the pathophysiology of this common skin disease. Patients with AD have a predisposition to colonization or infection by microbial organisms, most notably Staphylococcus aureus and herpes simplex virus (HSV). Measures directed at healing and protecting the skin barrier and controlling the immune activation are needed for effective management of AD. Early intervention may improve outcomes for AD as well as reduce the systemic allergen sensitization that may lead to associated allergic diseases in other organs.