Background: Severe skin rash as toxicity of erlotinib has been reported in relation to better response and survival. However, some patients require dose reduction due to skin toxicities, and their prognosis remains uncertain. We retrospectively evaluated the clinical course of non-small cell lung cancer patients receiving erlotinib at a reduced dose because of skin rash. Patients and Methods: Among 76 patients treated with erlotinib, 55 patients who developed skin rash severer than grade 2 were divided into 2 groups: 24 patients treated with erlotinib with dose reduction because of skin rash (dose reduction group) and 31 patients without any dose reduction (non-dose reduction group). Results: The median progression-free survival in the dose reduction and non-dose reduction groups was 341 and 70 days, respectively, and the median overall survival was 566 and 202 days, respectively (p < 0.001). In the dose reduction group, no smoking history, female sex, epidermal growth factor receptor gene mutation, and grade 3 skin rash were significant baseline factors. Conclusions: Patients who received erlotinib at a reduced dose following skin rash showed better survival than those without reduction. In cases of intolerable skin rash, patients may benefit from continuous treatment with a reduced dose of erlotinib.