Skin diseases are common human illnesses that occur in all cultures, at all ages, and affect between 30% and 70% of individuals globally. TRPV3 is a cation-permeable TRP channel predominantly expressed in skin keratinocytes, implicated in cutaneous sensation and associated with numerous skin diseases. TRPV3 is inhibited by the local anesthetic dyclonine, traditionally used for topical applications to relieve pain and itch. However, the structural basis of TRPV3 inhibition by dyclonine has remained elusive. Here we present a cryo-EM structure of a TRPV3-dyclonine complex that reveals binding of the inhibitor in the portals which connect the membrane environment surrounding the channel to the central cavity of the channel pore. We propose a mechanism of TRPV3 inhibition in which dyclonine molecules stick out into the channel pore, creating a barrier for ion conductance. The allosteric binding site of dyclonine can serve as a template for the design of new TRPV3-targeting drugs.