Cutaneous drug reactions (CDRs) are the most commonly reported adverse drug reactions. These reactions can range from mildly discomforting to life threatening. CDRs can arise either from immunological or nonimmunological mechanisms, though the preponderance of evidence suggests an important role for immunological responses. Some cutaneous eruptions appear shortly after drug intake, while others are not manifested until 7 to 10 days after initiation of therapy and are consistent with delayed-type hypersensitivity. This review discusses critical steps in the initiation of delayed-type hypersensitivity reactions in the skin, which include protein haptenation, dendritic cell activation/migration and T-cell propagation. Recently, an alternative mechanism of drug presentation has been postulated that does not require bioactivation of the parent drug or antigen processing to elicit a drug-specific T-cell response. This review also discusses the role of various immune-mediators, such as cytokines, nitric oxide, and reactive oxygen species, in the development of delayed-type drug hypersensitivity reactions in skin. As keratinocytes have been shown to play a crucial role in the initiation and propagation of cutaneous immune responses, we also discuss the means by which these cells may initiate or modulate CDRs.