Ascomycin derivatives represent a novel class of anti-inflammatory macrolactams currently under development for the treatment of skin diseases. The main biological effect of ascomycins is an inhibition of the synthesis of both Th1 and Th2-type cytokines in target cells. Several compounds are being developed with SDZ ASM 981 being at the most advanced stage. It has high anti-inflammatory activity in animal models of skin inflammation and does not induce skin atrophy. Topical application of SDZ ASM 981 was shown to be effective in atopic dermatitis (AD), allergic contact dermatitis and also in psoriasis under semi-occlusive conditions. In patients with AD, SDZ ASM 981 cream led to consistently low systemic exposure even when applied on large areas of skin. SDZ ASM 981 overcomes the drawbacks of current topical therapies of inflammatory skin diseases as its safety profile is better than that of topical corticosteroids. Studies continue to investigate its efficacy and safety in the treatment of inflammatory skin diseases.