Malassezia is a commensal fungus that constitutes normal skin microbiota. However, in certain conditions and individuals, it may transform into a pathogenic yeast with multiple associated dermatological disorders and various clinical manifestations. This phenomenon is influenced by a unique host-agent interaction that triggers the production of several virulence factors, such as indoles, reactive oxygen species, azelaic acid, hyphae formation, and biofilm formation. This review article discusses Malassezia virulence factors that contribute to the transformation of Malassezia from commensal to pathogenic as well as their role in dermatological disorders, including pityriasis versicolor, seborrheic dermatitis, Malassezia folliculitis, atopic dermatitis, and psoriasis.