Atopic dermatitis (AD) is the most common chronic inflammatory skin disease. Genetic predisposition, epidermal barrier disruption, and dysregulation of the immune system are some of the critical components of AD. An impaired skin barrier may be the initial step in the development of the atopic march as well as AD, which leads to further skin inflammation and allergic sensitization. Type 2 cytokines as well as interleukin 17 and interleukin 22 contribute to skin barrier dysfunction and the development of AD. New insights into the pathophysiology of AD have focused on epidermal lipid profiles, neuroimmune interactions, and microbial dysbiosis. Newer therapeutic strategies focus on improving skin barrier function and targeting polarized immune pathways found in AD. Further understanding of AD pathophysiology will allow us to achieve a more precision medicine approach to the prevention and the treatment of AD.