Colloidal oatmeal has a long history of beneficial use in dermatology. It is a natural product that has an excellent safety record and has demonstrated efficacy for the treatment of atopic dermatitis, psoriasis, drug-induced rash and other conditions. In recent years, in vitro and in vivo studies have begun to elucidate the multiple mechanisms of action of naturally derived colloidal oatmeal. Evidence now describes its molecular mechanisms of anti-inflammatory and antihistaminic activity. The avenanthramides, a recently described component of whole oat grain, are responsible for many of these effects. Studies have demonstrated that avenanthramides can inhibit the activity of nuclear factor kappaB and the release of proinflammatory cytokines and histamine, well known key mechanisms in the pathophysiology of inflammatory dermatoses. Topical formulations of natural colloidal oatmeal should be considered an important component of therapy for atopic dermatitis and other conditions and may allow for reduced use of corticosteroids and calcineurin inhibitors.