Background: Atopic dermatitis is a chronic skin disease with significant impairment of quality of life. A significant association with psychiatric co-morbidities has been shown in recent studies. Methodology: The first phase includes an assessment for psychiatric co-morbidities with a 12- item general health questionnaire (GHQ-12). In the second phase, patients with GHQ-12 ≥3 were assessed for various psychiatric illnesses using the Hamilton anxiety rating scale, Beck depression inventory, and Yale-Brown obsessive-compulsive scale. Clinical diagnosis was made using ICD-10 criteria and quality of life was measured using WHO-QOL brief scale. Results Sixty-eight patients were recruited, 24 (35.3%) of them had GHQ-12 ≥3 and were included in the second phase. On phase 2 screening, 12 (17.6%) patients had anxiety and 12 (17.6%) patients had depression. Significant impairment of quality of life affecting all 4 domains was seen in all the patients. Conclusion Our study shows a high incidence of psychiatric co-morbidities (35.3%) especially anxiety and depression in patients with atopic dermatitis.