The inability of two-dimensional cell culture systems to adequately map the structure and function of complex organs like skin necessitates the development of three-dimensional (3D) skin models. A diverse range of 3D skin equivalents have been developed over the last few decades for studying complex properties of skin as well as for drug discovery and clinical applications for skin regeneration in chronic wounds, such as diabetic foot ulcers, where the normal mechanism of wound healing is compromised. These 3D skin substitutes also serve as a suitable alternative to animal models in industrial applications and fundamental research. With the emergence of tissue engineering, new scaffolds and matrices have been integrated into 3D cell culture systems, along with gene therapy approaches, to increase the efficacy of transplanted cells in skin regeneration. This review summarizes recent approaches to the development of skin equivalents as well as different models for studying skin diseases and properties and current therapeutic applications of skin substitutes.