Human skin is inhabited by commensal microbiota comprising bacteria, fungi, viruses, and demodex mites. The skin microbiome is associated with several vital functions for the host, such as maintaining barrier integrity, modulating lipid homeostasis, eliminating pathogens, and stimulating the immune reactions. However, alterations in the composition of the skin microbiome are often found to be linked with inflammatory dermatological conditions like atopic dermatitis, psoriasis, acne vulgaris, rosacea, and wound-associated infections. These conditions can be diagnosed using culture-dependent and advanced culture-independent analyses, including multi-omics platforms and high-throughput sequencing technologies. Developments in microbiome research and biotechnology have catalysed initiatives to modify the skin microbiota as a therapeutic intervention. Current strategies encompass precision medicine utilising biomarkers, transplantation of complete microbial consortia, application of specific commensal microbes, bacteriophage therapy, use of pre- and probiotic metabolites, as well as sanitizers and antibiotics. This study consolidates existing knowledge regarding the composition and functional roles of the skin microbiome, investigates dysbiosis in skin pathologies, and examines potential microbiome-targeted therapeutic interventions. The study intends to address the challenges and future directions related to the clinical implementation of microbiome-targeted approaches, encompassing the regulatory aspects necessary to guarantee the efficacy and safety of innovative diagnostic and therapeutic applications.