Introduction Scabies can lead to community outbreaks if not diagnosed early. Developing and validating a relevant tool for diagnosing scabies at the community level is essential to bridging the early diagnosis and treatment gap. Objective The objective of this study is to develop and validate a newer tool to diagnose scabies at the community level by Community Healthcare Workers (CHWs) in resource-limited settings. Methods The developed "ScAbIeS" tool comprised five items divided into two major and three minor criteria. After its development, a longitudinal descriptive study validated the "ScAbIeS" tool. The eligible participants were included in the study through active screening in villages under the Rural Health Training Center (RHTC) Mendhasala. Those villages' Accredited Social Health Activists (ASHS) were included as CHWs for diagnosing scabies using the "ScAbIeS" tool. The participants with skin lesions and/or itching were diagnosed with scabies by CHWs using the "ScAbIeS" tool. The diagnosis of CHWs using the "ScAbIeS" tool was compared with those of physicians, including expert dermatologists, to determine the sensitivity and specificity. Results Kappa's agreement is found to be 0.896 for CHWs and trained physicians regarding the diagnosis of scabies by the "ScAbIeS" tool. Cronbach's alpha is 0.738 for major criteria and 0.565 for minor criteria. 0.778 is found to be Cronbach's alpha for the total scale. The "ScAbIeS" tool is 85% sensitive and 100% specific to diagnose scabies when used by CHWs. Conclusion The "ScAbIeS" tool can be used to diagnose scabies at the community level by CHWs with appropriate training. It will lead to the prevention of complications and community outbreaks of scabies.