Localized scleroderma is a rare autoimmune disease with primary affection of the skin, and occasional involvement of the fat tissue, muscle, fascia, and bone. Depending on the clinical subtype, the spectrum of skin lesions ranges from singular plaque lesions to severe generalized or linear subtypes which may lead to movement restrictions and permanent disability. This German S1-guideline proposes a classification of localized scleroderma that, considering the extent and depth of fibrosis, distinguishes limited, generalized, linear, and deep forms of localized scleroderma, together with its associated subtypes. The guideline includes a description of the pathogenesis, of differential diagnoses, and particular aspects of juvenile localized scleroderma, as well as recommendations for histopathologic, serologic, and biometric diagnostic procedures. Based on studies of topical and systemic treatments as well as phototherapy for localized scleroderma published in international literature, a treatment algorithm was developed which takes account of the different subtypes and the extent of disease.