Topical corticosteroids have improved the management of many inflammatory skin diseases, such as psoriasis and atopic dermatitis. However, these medications are associated with certain adverse effects that are potentially serious. The potent anti-inflammatory actions of these drugs increase susceptibility to bacterial and fungal infections, and therefore may preclude them from use when infection is the known cause of the disease. In addition, children may be more vulnerable than adults to systemic effects of topical corticosteroids because percutaneous absorption is proportionately greater. These are important considerations, and physicians need to weigh and compare the risks and benefits associated with these medications before initiating treatment. This involves an appreciation of which patient populations are at high risk, which skin conditions are incompatible with topical corticosteroid therapy, and which alternative nonsteroidal medications are effective in treating inflammatory skin diseases.