Skin fungi in cutaneous health and disease. The immunity to skin fungi is context‐dependent with fungal factors being able to modulate the host immune response and influence health during commensalism and disease settings during infection and immunopathology. Commensal fungi are recognized by dendritic cells (DCs) primarily via C‐type lectin receptors (CLRs) or by TRPV1+ neurons that facilitate recruitment of IL‐17A‐producing γδ (γδT17) and initiate priming of a fungus‐specific adaptive immunity including IgG detectable in the blood as well as local and systemic T helper 17 cells (Th17). γδT17 and Th17 contribute to keeping the fungi in check during commensalism by IL‐17A and IL‐22 secretion. Furthermore, the cutaneous microbiota interacts with skin fungi in several ways, including gene acquisition via horizontal gene transfer (HGT) or Malassezia‐mediated inhibition of Staphylococcus aureus biofilm formation. Besides the diversity of different fungal species residing on the skin including Malassezia spp. and Candida spp., analyzing intra‐species diversity may shed light on pathology‐associated colonization. Upon breaching of the epithelial barrier or tissue entry via wounds, skin fungi can penetrate into deeper tissue layers causing IL‐17‐mediated inflammation and further damage. The secreted aspartyl protease 1 of M. furfur (MfSAP1) can interfere with wound healing. In case of innate immune deficiencies involved in IL‐17 induction such as CARD9, the downstream adaptor of CLR signalling, cutaneous fungi cannot be controlled properly. Fungal overgrowth and chronic mucocutaneous candidiasis (CMC) result as a consequence. On the other hand, excessive or pathogenic IL‐17‐production can cause chronic inflammation and skin tissue remodelling as observed in psoriasis. Aberrant antifungal type 2 responses including fungus‐specific Th2 and IgE are recognized in atopic dermatitis (AD). While AD flares are associated with a leaky skin barrier and overgrowth of S. aureus, Malassezia‐specific type 2 responses are correlated with AD disease severity. Th2‐derived cytokines such as IL‐4, IL‐5 and IL‐13 contribute to neuron activation and itching as well as granulocyte recruitment into the skin including mast cells (MCs) bearing IgE on their surface. Malassezia‐derived allergens, for example, Mala s 11 and Mala s 13, can act as auto‐antigens due to cross‐reactivity with host proteins, henceforth aggravating disease. Fungal factors can modulate the host immune response during steady‐state and inflammation. Fungal metabolites and enzymes can act as skin irritants or interfere with the host's skin barrier function. Conserved structures of the fungal cell wall such as β‐glucans, which are recognized by CLRs, are key factors in immune recognition and initiating protective antifungal responses. Other fungal surface structures such as hydrophobins found on dermatophytes assist in evasion of immune recognition by the host. The figure was created using Biorender.com.