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Noninvasive in vivo imaging techniques have become an important diagnostic aid for skin cancer detection. Dermoscopy, also known as dermatoscopy, epiluminescence microscopy, incident light microscopy, or skin surface microscopy, has been shown to increase the clinician's diagnostic accuracy when evaluating cutaneous neoplasms. A handheld instrument called a dermatoscope or dermoscope, which has a transilluminating light source and standard magnifying optics, is used to perform dermoscopy. The dermatoscope facilitates the visualization of subsurface skin structures that are not visible to the unaided eye. The main purpose for using dermoscopy is to help correctly identify lesions that have a high likelihood of being malignant (i.e., melanoma or basal cell carcinoma) and to assist in differentiating them from benign lesions clinically mimicking these cancers. Colors and structures visible with dermoscopy are required for generating a correct diagnosis. Routinely using dermoscopy and recognizing the presence of atypical pigment network, blue-white color, and dermoscopic asymmetry will likely improve the observer's sensitivity for detecting pigmented basal cell carcinoma and melanoma. A two-step algorithm based on a seven-level criterion ladder is the foundation for dermoscopic evaluation of skin lesions. The first step of the algorithm is intended to help physicians differentiate melanocytic lesions from the following nonmelanocytic lesions: dermatofibroma, basal cell carcinoma, seborrheic keratosis, and hemangioma. The second step is intended to help physicians differentiate nevi from melanoma using one of several scoring systems. From a management perspective, the two-step algorithm is intended to guide the decision-making process on whether to perform a biopsy, or to refer or reassure the patient.