Hydrocolloid dressings are commonly used in the treatment of chronic wounds by forming a gel-like protective layer upon the dispersion of water, absorbing exudate, and creating a moist environment that promotes healing. However, the use of hydrocolloids has expanded outside of wound care, and this review summarizes the evidence for their use within dermatology. To perform this narrative review, several databases were searched for manuscripts that described the use of hydrocolloid dressings within dermatology. The hydrophilic and colloidal dispersion properties of hydrocolloid dressings facilitate the formation of an absorptive, hydrating, and protective layer. In addition, the viscous layer supports innate immunity by activating immune cells such as granulocytes and monocytes, making them effective in wound care. Hydrocolloid dressings appear to be an effective treatment in acute wounds, with the potential of reduced healing time and easier application compared to traditional dressings. The majority of the related research suggests that hydrocolloid dressings and standard dressings have similar efficacy in healing pressure ulcers, and the prevention of hypertrophic and keloid scars. Early reports suggest that hydrocolloid dressings have a role in the treatment of facial dermatitis and acne vulgaris. Hydrocolloid dressings have been studied most extensively for chronic wounds and then for use in acute wounds. There have been a few studies on their use for treating acne, facial atopic dermatitis, and hypertrophic scarring. While more clinical studies are needed, there appears to be early evidence of hydrocolloid dressing use within dermatology.