Allergic contact dermatitis (ACD) is a common occupational and environmental health issue. In common with other forms of allergy the disease progresses in two stages; an initial phase during which sensitization is acquired, followed later (after subsequent exposure to the same chemical allergen) by elicitation of a cutaneous inflammatory reaction. The development of skin sensitization is associated with, and requires, the activation and clonal expansion of allergen responsive T lymphocytes and it is these cells that orchestrate the cutaneous allergic reaction. In recent years, much has been learned of the characteristics of immune responses to skin sensitizing chemicals and of the roles played by dendritic cells, cytokines and chemokines. Some of the more interesting cellular and molecular mechanisms are reviewed briefly in this article. A more detailed appreciation of responses induced by chemical allergens has in turn facilitated the design of novel approaches to the toxicological evaluation of skin sensitization. Real progress has been made, not only in the development of improved methods for hazard identification and characterization, but also in the application of new paradigms for risk assessment. The newer methods now available and the opportunities that exist for further advances are considered. Finally, progress has been made in the characterization of skin sensitization in humans and in the clinical management of ACD. This article seeks to consider skin sensitization and ACD in holistic fashion, bridging experimental observations with clinical disease and basic mechanisms with practical toxicology.