Malassezia yeasts are commensals of normal human skin, but also cause pityriasis versicolor, seborrhoeic dermatitis and evidence is accumulating that they play a significant role in atopic eczema/dermatitis syndrome (AEDS; formerly atopic dermatitis). The taxonomy of the genus has changed considerably and is likely to change more in the future. Our understanding of the interaction between Malassezia and the host demonstrates that it has the paradoxical ability to both stimulate and suppress the immune response directed against it and there is a fine balance in its existence at the interface between commensalism and pathogenicity.