Psoriasis, a chronic inflammatory skin disease, affects millions of people worldwide. It imposes a significant burden on patients’ quality of life and healthcare systems, creating an urgent need for optimized diagnosis, treatment, and management. In recent years, image-based artificial intelligence (AI) applications have emerged as promising tools to assist physicians by offering improved accuracy and efficiency. In this review, we provide an overview of the current landscape of image-based AI applications in psoriasis. Emphasis is placed on machine learning (ML) algorithms, a key subset of AI, which enable automated pattern recognition for various tasks. Key AI applications in psoriasis include lesion detection and segmentation, differentiation from other skin conditions, subtype identification, automated area involvement, and severity scoring, as well as personalized treatment selection and response prediction. Furthermore, we discuss two commercially available systems that utilize standardized photo documentation, automated segmentation, and semi-automated Psoriasis Area and Severity Index (PASI) calculation for patient assessment and follow-up. Despite the promise of AI in this field, many challenges remain. These include the validation of current models, integration into clinical workflows, the current lack of diversity in training-set data, and the need for standardized imaging protocols. Addressing these issues is crucial for the successful implementation of AI technologies in clinical practice. Overall, we underscore the potential of AI to revolutionize psoriasis management, highlighting both the advancements and the hurdles that need to be overcome. As technology continues to evolve, AI is expected to significantly improve the accuracy, efficiency, and personalization of psoriasis treatment.