Atopic dermatitis (AD) is a common pruritic inflammatory skin disease with unclear molecular and cellular contributions behind the complex etiology. To unravel these differences between healthy control and AD skin we employed single-cell transcriptomics, utilizing the canine AD model for its resemblance to human clinical and molecular phenotypes. In this study, we show that there are overall increases in keratinocytes and T cells and decreases in fibroblast populations in AD dogs. Within immune cell types, we identified an enriched γδ T cell population in AD, which may contribute to cutaneous inflammation. A prominent IL26-positive fibroblast subpopulation in AD was detected, which may activate neighboring cells in the dermal–epidermal niche. Lastly, by comparing dogs with different disease severities, we found genes that follow disease progression and may serve as potential biomarkers. In this study, we characterized key AD cell types and cellular processes that can be further leveraged in diagnosis and treatment.