Rheumatoid and psoriatic arthritis (RA and PsA, respectively) are common types of inflammatory arthritis. Differentiating between the two diseases in their early stages is challenging, especially in the absence of diagnostic biomarkers and specific psoriatic lesions. Our aim was to evaluate the role of musculoskeletal ultrasonography (MSUS) and dermoscopy in the diagnosis of PsA and RA. Sixty patients with early hand arthritis diagnosed as seronegative RA, seropositive RA, or PsA were enrolled in this case-control study. All patients underwent rheumatological and dermatological clinical assessments and MSUS and dermoscopic examinations. All patients were followed up after one year of recommended treatment. Wrist and metacarpophalangeal joint (MCP) synovitis and erosions were higher in patients with RA than in those with PsA. The MSUS features of PsA, including distal interphalangeal joint (DIP) synovitis, flexor tenosynovitis, central slip enthesitis, and DIP enthesitis, were significantly higher in the PsA group than in the RA group. In addition, dermoscopic scalp, nail, and elbow findings of psoriasis are more commonly found in PsA than in RA. Similar MSUS and dermoscopic differences were detected after one year of follow-up. The sensitivity and specificity of at least one MSUS feature for PsA diagnosis were 90% and 62%, respectively, whereas those of combined MSUS and nail dermoscopy were 42% and 100%, respectively. We concluded that Both MSUS and dermoscopy could differentiate patients with PsA from those with RA, and combining both modalities may increase the likelihood of accurate diagnosis.