Clinical differentiation between palmar psoriasis and chronic hand eczema may sometimes be a diagnostic challenge; in such cases histopathological analysis helps to differentiate the two conditions. In the present study, palmar psoriasis and chronic hand eczema were investigated using dermoscopy and the significance of specific dermoscopic features was assessed in order to improve their non‐invasive differentiation. Ten patients with biopsy‐proven palmar psoriasis and 11 patients with biopsy‐proven chronic hand eczema were included in the study. We found that the presence of diffuse white scales was significant in palmar psoriasis whereas the presence of yellowish scales, brownish‐orange dots/globules and yellowish‐orange crusts was significant in chronic hand eczema.