Drug delivery through the skin provides several advantages over other administration routes, including the avoidance of first-pass metabolism and gastrointestinal side effects, prolonged drug release, and significant improvement in patient compliance. It is imperative to study the in vitro behavior of drugs and formulations before proceeding to in vivo evaluations. As the ethical guidelines for scientific research evolve, there is an increasing emphasis on adopting alternative methods to reduce animal use. An in vitro permeation study (IVPT) estimates the rate and extent of drug permeation from a topical or transdermal delivery, determining its availability at the skin layers or into the systemic circulation. Vertical Franz diffusion cells are commonly employed for IVPT studies to evaluate the permeation of drugs across skin or other biorelevant membranes. This comprehensive review provides a clear understanding of the importance of optimizing in vitro experimental conditions to obtain reliable and reproducible data. We discuss various in vitro skin models, including excised human and animal skins, human skin equivalents (HSEs), synthetic membranes, and 3D-printed skin models. Additionally, a broad overview of setting up in vitro diffusion cells is provided. Emphasis is given on donor phase design, receptor medium selection, the importance of solubility and stability studies, sampling techniques, and analysis methods. Meticulous design and optimization of in vitro permeation experiments are crucial for generating reproducible data, which are essential for predicting the dermatokinetics of drugs and formulations.