Photodynamic therapy (PDT) is largely an experimental modality for the treatment of neoplastic and selected nonneoplastic diseases. This therapeutic procedure, through a cascade of events, leads to cell killing. In the past few years, dermatology has taken advantage of PDT for the treatment of skin cancer and other skin diseases. The skin has considerable attributes over many other organs for the application of PDT. These include the accessibility to all three PDT essential requirements; the drug (photosensitizing agent), visible light and oxygen. The major benefit of experimental PDT in dermatology is the ability to assess the clinical response visually and the relative ease in obtaining biopsies for precise biochemical and histological analysis. Currently, PDT has received approval worldwide for the ablation of various tumor types. In the United States, the Food and Drug Administration has approved PDT for the treatment of advanced esophageal cancer and selected patients with lung cancer. Clinical trials, employing several types of photosensitizers for PDT, are ongoing for a variety of dermatological lesions. This review summarizes current knowledge of PDT in dermatology and highlights future perspectives of this modality for effective management of skin diseases.