Atopic dermatitis (AD) is a pruritic chronic inflammatory disease of the skin that is triggered by an underlying complicated interplay between the genetics of the individual and stimulation by allergens. Patients with AD demonstrate compromised barrier function that leads to activation of keratinocytes and immune cells which favor a strong Th2 bias. As a result of this immunological bias such patients also suffer from secondary pathogenic infections. A wide array of cytokines and chemokines interact to yield symptoms characteristic of AD. In addition, the involvement of different immunological cell types compounds our difficulty in understanding its immunopathogenesis. The use of various mouse models and transgenics has allowed us to intricately examine the functioning of the various molecules identified to play a role in AD. Such mouse models have also aided in the testing and development of various therapeutics for AD. This review is focused on examining the various factors contributing to the pathogenesis and exacerbation of AD as well as current treatments for AD. There is scope for improving the therapy of AD patients and thereby allowing them a better quality of life.