Fragrance materials—derived from natural extracts, essential oils, synthetic aroma chemicals, and complex mixtures—are integral components of a wide range of consumer products. They are used both to impart pleasant scents and to mask undesirable odors, contributing to the appeal and acceptance of personal care, household, and industrial formulations. Despite their widespread use, fragrance materials are not without health risks. Among the various biological effects reported, the chapter focuses on skin sensitization and allergic contact dermatitis (ACD). ACD represents the most prevalent adverse outcome and is classified as a Type IV (delayed-type) hypersensitivity reaction, mediated by allergen-specific T cells following skin exposure to sensitizing chemicals. This chapter explores the chemical properties of fragrance substances and the mechanistic processes underlying both the sensitization and elicitation stages of ACD. Understanding these pathways is a prerequisite for accurate diagnosis, risk assessment, and management of fragrance-induced allergies in clinical and regulatory settings. As the field advances and assessment of skin sensitization potential shifts away from reliance on occasional observations by patch test results and animal data, we are briefly summarizing the progress that has been made in developing New Approach Methodologies (NAMs). These include in vitro, in chemico, and computational models that aim to predict human sensitization potential and potency more efficiently, ethically, and mechanistically. The integration of these methods offers a modern framework for hazard identification and safety evaluation of fragrance ingredients.