Shikonin is one of the primary active components extracted from the dried root ofZicao (Lithospermum erythrorhizon, Onosma paniculata, or Arnebia euchroma), a traditional Chinese herbal medicine. Shikonin is known to not only exert anti-proliferative, anti-inflammatory, and anti-angiogenic activities, but also play a crucial role in triggering the production of reactive oxygen species, suppressing the release of exosomes, and inducing apoptosis. Increasing evidence suggests that shikonin has a protective effect against skin diseases, including psoriasis, melanoma, and hypertrophic scars. In order to evaluate the application potential of shikonin in the treatment of skin diseases, this review is the first of its kind to provide comprehensive and up-to-date information regarding the uses of shikonin and its derivatives on skin diseases and its underlying mechanisms. In this review, we have focused on the signaling pathways and cellular targets involved in the anti-dermatosis effects of shikonin to bridge the gaps in the literature, thereby providing scientific support for the research and development of new drugs from a traditional medicinal plant.