Essential oils (EOs) are known to have varying degrees of antimicrobial properties that are mainly due to the presence of bioactive compounds. These include antiviral, nematicidal, antifungal, insecticidal and antioxidant properties. This review highlights the potential of EOs and their compounds for application as antifungal agents for the treatment of skin diseases via conventional and nonconventional approaches. A search was conducted using three databases (Scopus, Web of Science, Google Scholar), and all relevant articles from the period of 2010–2020 that are freely available in English were extracted. In our findings, EOs with a high percentage of monoterpenes showed strong ability as potential antifungal agents. Lavandula sp., Salvia sp., Thymus sp., Citrus sp., and Cymbopogon sp. were among the various species found to show excellent antifungal properties against various skin diseases. Some researchers developed advanced formulations such as gel, semi-solid, and ointment bases to further evaluate the effectiveness of EOs as antifungal agents. To date, most studies on the application of EOs as antifungal agents were performed using in vitro techniques, and only a limited number pursued in vivo and intervention-based research.