Malassezia belongs to the fungal division Basidiomycota and plays an important role in the mycobiome of the mammalian system. The fungus propagates by budding and mostly remains commensal with the host comprising of warm-blooded animals. During infection, it converts from yeast to its pathogenic hyphal form and this leads to many diseases in humans. Currently, there are 18 known species of Malassezia out of which 11 species are related to humans and the prevalence of the species varies with geographical location. In addition to several diseases it causes, recent research shows the direct role of the fungus in promoting oncogenesis. The fungus thrives with a fine balance between commensalism and its pathogenic state. Its high lipid content in the cell wall provides a robust defense system against the host immunogenic factors. In this review, we discuss the role of the fungus and its host cell receptors in promoting inflammation and disease. We highlight the potential procancerous role of the metabolites produced by Malassezia in tumor development and highlight how the antimicrobial peptides like Defensin and Nanovesicles like MalaEx modulate the host defense system. Finally, we discuss the importance of fungal dysbiosis caused by Malassezia and its role in human diseases. Though working with the fungus is difficult for several reasons, utilizing modern genomic approaches to understanding the biology of this fungus is of tremendous clinical importance. This review highlights different ways by which the fungus affects human health and often leads to several life-threatening diseases including cancer.