Dermatoscopy or epiluminescence microscopy (ELM), is a noninvasive method that enables clinicians to evaluate fully--by means of a magnified oil immersion diascopy--numerous morphological features, not visible with the naked eye, which enhance the diagnosis of nearly all pigmented skin lesions. In recent years, a burst of research activity in this topic has been carried out, dealing with different aspects, and new frontiers, of this technique. First, a continuous refinement of dermatoscopic terminology is undertaken, paying particular attention to the diagnostic performance of dermatoscopy at peculiar anatomical sites and to the building of different dermatoscopic algorithms aimed at a simplified diagnosis of melanoma, even for less experienced observers. Another point of interest concerns the possible role of dermatoscopy in the pre-operative assessment of melanoma thickness. Finally, promising data about the role of digital equipment in the follow up of melanocytic skin lesions as well as in the automated diagnosis of pigmented skin lesions have been recently reported. This paper should enable readers to become familiar with the procedure and terminology of ELM in the diagnosis of pigmented skin lesions encouraging a greater understanding of different methods (pattern analysis, algorithms) in the diagnosis of melanoma using ELM.