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The histopathological diagnosis of dermal-based lymphoid infiltrates and proliferations is often challenging due to the vast list of biologically diverse entities that archetypally or occasionally center in the mid-dermis, especially because significant overlap exists in their clinical, histopathologic, and immunophenotypic features. The differential diagnosis includes reactive infiltrates in common and rare inflammatory dermatoses, benign conditions that may mimic lymphoid neoplasms (pseudolymphomas), and true clonal proliferations arising either primarily in the skin or rarely in extracutaneous tissues with secondary cutaneous dissemination. While numerous histopathological and immunophenotypic features have been reported to support a definitive diagnosis, no single ancillary test is sufficient for their distinction. Therefore, in this review we advocate a stepped histopathological approach for dermal-based lymphoid infiltrations, employing as key elements the general lymphocytic composition (relative B- versus T-cell ratio), coupled with the predominant cytomorphology (cell size) present. Following this strategy, the relative incidence of cutaneous involvement by each disease should always be considered, as well as the notion that a definitive diagnosis must be founded on a multiparameter approach integrating all clinical, histopathologic, immunophenotypic, and—in selected cases—molecular features.