Malassezia spp. are lipophilic fungi that occur on all skin surfaces of humans and animals as commensal and pathogenic organisms. In the 2000s, several new species were added to the Malassezia genus by Japanese researchers. The genus Malassezia now includes 14 species of basidiomycetous yeast. Culture-independent molecular analysis clearly demonstrated that the DNA of Malassezia spp. was predominantly detected in core body and arm sites, suggesting that they are the dominant fungal flora of the human body. Malassezia spp. have been implicated in skin diseases including pityriasis versicolor (PV), Malassezia folliculitis (MF), seborrheic dermatitis (SD) and atopic dermatitis (AD). While Malassezia spp. are directly responsible for the infectious diseases, PV and MF, they act as an exacerbating factor in AD and SD. The fatty acids generated by Malassezia lipase can induce inflammation of the skin, resulting in development of SD. Patch and serum immunoglobulin E tests revealed that AD patients were hypersensitive to Malassezia. However, these findings only partially elucidated the mechanism by which Malassezia spp. induce inflammation in the skin; understanding of the pathogenetic role of Malassezia spp. in SD or AD remains incomplete. In this article, the latest findings of Malassezia research are reviewed with special attention to skin diseases.