Reflectance confocal microscopy is currently the most promising noninvasive diagnostic tool for studying cutaneous structures between the stratum corneum and the superficial reticular dermis. This tool gives real-time images parallel to the skin surface; the microscopic resolution is similar to that of conventional histology. Numerous studies have identified the main confocal features of various inflammatory skin diseases and tumors, demonstrating the good correlation of these features with certain dermatoscopic patterns and histologic findings. Confocal patterns and diagnostic algorithms have been shown to have high sensitivity and specificity in melanoma and nonmelanoma skin cancer. Possible present and future applications of this noninvasive technology are wide ranging and reach beyond its use in noninvasive diagnosis. This tool can also be used, for example, to evaluate dynamic skin processes that occur after UV exposure or to assess tumor response to noninvasive treatments such as photodynamic therapy. We explain the characteristic confocal features found in the main nonmelanoma skin tumors and discuss possible applications for this novel diagnostic technique in routine dermatology practice.