Fumaric acid esters (FAEs) such as dimethylfumarate (DMF) are used for the treatment of adults with moderate-to-severe psoriasis. The mode of action of FAEs is complex. Here, we provide a comprehensive review of the literature to describe the molecular mechanisms by which DMF and its active metabolite monomethylfumarate (MMF) exert their anti-inflammatory and immune modulatory effects. MMF can bind to the hydroxy-carboxylic acid receptor 2 (HCA2) on the cell surface and both DMF and MMF react with intracellular glutathione following cell penetration. DMF and to some extent also MMF modulate the activity of certain cellular signalling proteins such as the nuclear factor (erythroid-derived 2)-like 2 (Nrf2), nuclear factor kappa B (Nf-κB) and the cellular concentration of cyclic adenosine monophosphate. Some studies show that DMF can also affect the hypoxia-inducible factor 1-alpha (HIF-1α). These actions seem to be responsible for i) the downregulation of inflammatory cytokines and ii) an overall shift from a proinflammatory Th1/Th17 response to an anti-inflammatory/regulatory Th2 response. Both steps are necessary for the amelioration of psoriatic inflammation, although additional mechanisms have been proposed. There is a growing body of evidence to support the notion that DMF/MMF may also exert effects on granulocytes and non-immune cell lineages including keratinocytes and endothelial cells. A better understanding of the multiple molecular mechanisms involved in the cellular action of FAEs will help to adapt and further improve the use of such small molecules for the treatment of psoriasis and other chronic inflammatory diseases.