With the development of artificial intelligence, technique improvement of the classification of skin disease is addressed. However, few study concerned on the current classification system of International Classification of Diseases, Tenth Revision (ICD)-10 on Diseases of the skin and subcutaneous tissue, which is now globally used for classification of skin disease. This study was aimed to develop a new taxonomy of skin disease based on cytology and pathology, and test its predictive effect on skin disease compared to ICD-10. A new taxonomy (Taxonomy 2) containing 6 levels (Project 2-4) was developed based on skin cytology and pathology, and represents individual diseases arranged in a tree structure with three root nodes representing: (1) Keratinogenic diseases, (2) Melanogenic diseases, and (3) Diseases related to non-keratinocytes and non-melanocytes. The predictive effects of the new taxonomy including accuracy, precision, recall, F1, and Kappa were compared with those of ICD-10 on Diseases of the skin and subcutaneous tissue (Taxonomy 1, Project 1) by Deep Residual Learning method. For each project, 2/3 of the images were included as training group, and the rest 1/3 of the images acted as test group according to the category (class) as the stratification variable. Both train and test groups in the Projects (2 and 3) from Taxonomy 2 had higher F1 and Kappa scores without statistical significance on the prediction of skin disease than the corresponding groups in the Project 1 from Taxonomy 1, however both train and test groups in Project 4 had a statistically significantly higher F1-score than the corresponding groups in Project 1 (P = 0.025 and 0.005, respectively). The results showed that the new taxonomy developed based on cytology and pathology has an overall better performance on predictive effect of skin disease than the ICD-10 on Diseases of the skin and subcutaneous tissue. The level 5 (Project 4) of Taxonomy 2 is better on extension to unknown data of diagnosis system assisted by AI compared to current used classification system from ICD-10, and may have the potential application value in clinic of dermatology.