All skin diseases have an underlying immune component. Owing to differences in animal and human immunology, the majority of drugs fail in the preclinical or clinical testing phases. Therefore animal alternative methods that incorporate human immunology into in vitro skin disease models are required to move the field forward. This review summarizes the progress, using examples from fibrosis, autoimmune diseases, psoriasis, cancer and contact allergy. The emphasis is on co-cultures and 3D organotypic models. Our conclusion is that current models are inadequate and future developments with immune-competent skin-on-chip models based on induced pluripotent stem cells could provide a next generation of skin models for drug discovery and testing.