Chronic inflammation is linked to the development and progression of multiple cancers, including those of the lung, stomach, liver, colon, breast and skin. Inflammation not only drives the oncogenic transformation of epithelial cells under the stress of chronic infection and autoimmune diseases, but also promotes the growth, progression and metastatic spread of cancers. Tumor-infiltrating inflammatory cells are comprised of a diverse population of myeloid and immune cell types, including monocytes, macrophages, dendritic cells, T and B cells, and others. Different myeloid and lymphoid cells within tumor microenvironment exert diverse, often contradicting, effects during skin cancer development and progression. The nature of tumor-immune interaction determines the rate of cancer progression and the outcome of cancer treatment. Inflammatory environment within skin tumor also inhibits naturally occurring anti-tumor immunity and limits the efficacy of cancer immunotherapy. In this article we aim to give an overview on the mechanism by which inflammation interferes with the development and therapeutic intervention of cancers, especially those of the skin.