Sulfur mustard (SM) is a strong alkylating agent, which produces subepidermal blisters, erythema and inflammation after skin contact. Despite the well-described SM-induced gross and histopathological changes, the exact underlying molecular mechanisms of these events are still a matter of research. As part of an international effort to elucidate the components of cellular signal transduction pathways, a large body of data has been accumulated in the last decade of SM research, revealing deeper insight into SM-induced inflammation, DNA damage response, cell death signaling, and wound healing. SM potentially alkylates nearly every constituent of the cell, leading to impaired cellular functions. However, SM-induced DNA alkylation has been identified as a major trigger of apoptosis. This includes monofunctional SM-DNA adducts as well as DNA crosslinks. As a consequence, DNA replication is blocked, which leads to cell cycle arrest and DNA single and double strand breaks. The SM-induced DNA damage results in poly(ADP-ribose) polymerase (PARP) activation. High SM concentrations induce PARP overactivation, thus depleting cellular NAD(+) and ATP levels, which in consequence results in necrotic cell death. Mild PARP activation does not disturb cellular energy levels and allows apoptotic cell death or recovery to occur. SM-induced apoptosis has been linked both to the extrinsic (death receptor, Fas) and intrinsic (mitochondrial) pathway. Additionally, SM upregulates many inflammatory mediators including interleukin (IL)-1alpha, IL-1beta, IL-6, IL-8, tumor necrosis factor-alpha (TNF-alpha) and others. Recently, several investigators linked NF-kappaB activation to this inflammatory response. This review briefly summarizes the skin toxicity of SM, its proposed toxicodynamic actions and strategies for the development of improved medical therapy.