The development of topical corticosteroids since the 1950s has opened new doors for dermatologists previously faced with treating intractable dermatoses, so that the pharmacology of topically applied corticosteroids is now reasonably well described. Manipulation of the steroid molecule has produced compounds with greater lipophilicity, fewer mineralocorticoid properties and high potency. Potency is determined through various techniques, notably the vasoconstrictor assay as well as the mitotic index suppression method and atrophogenic potential assay. The mechanism of activity of corticosteroids is thought to result, at least in part, from binding of the drug to steroid receptors, with resultant effects on the synthesis of proteins responsible for specific effects. Corticosteroids are proposed to alter the inflammatory response, and thus provide therapeutic benefits, via actions on mediator release and function, inflammatory cell function and release of lysosomal enzymes. Disadvantages of corticosteroid activity include the possibility of adrenal suppression, epidermal and dermal thinning, and local effects such as purpura, striae, and steroid-induced rosacea and perioral dermatitis. The cutaneous pharmacokinetics, particularly of absorption of topical corticosteroids, must be examined in parallel with their pharmacodynamic effects to gain a more complete understanding of activity. Many factors can affect percutaneous steroid absorption: drug lipophilicity and solubility, drug concentration, anatomical site, age of the patient, presence of skin disease and use of occlusive dressings will each influence the degree to which topically applied corticosteroids achieve their intended therapeutic results. Cutaneous metabolism is a poorly understood process at present, but one which is acknowledged to have some impact on the biotransformation of corticosteroids applied topically. Thus, although some gaps still persist in present knowledge of the pharmacology and pharmacokinetics of this important class of drugs, there can be no denying the contribution of topical corticosteroids to the therapy of dermatoses.