Patients will be first screened to be sure they are healthy (aside from atopic dermatitis) with a physical exam, and lab tests. These lab tests consist of CBC, biochemical profile, hepatitis B and C profile, urine analysis, HIV, PPD, and urine pregnancy test (if applicable). Patients will return in 2 to 3 days for PPD reading. A repeat serum creatinine will be drawn at this time so as to have 2 baseline values. Patient will begin taking cyclosporine at 5 mg/kg of body weight in 2 divided daily doses for 12 weeks, and after this period the dose will be reduced by 1mg/kg per week (the tapering down will start at 12 weeks of treatment), so that cessation of treatment will occur after 16 weeks from the start of treatment. Patients will then be followed in clinic for an additional 8 weeks for a potential relapse, and if a relapse will occur topical treatment with corticosteroids, immune-modulators or phototherapy may be instituted. Patients will be seen in the outpatient clinic at baseline, wks 1,2, 4, 6, 8, 10, and 12 and every 2weeks until completion of a 24-week study. Biopsies (of lesional and non-lesional skin) will be done to assess histological response at baseline, week 2, week 6 (optional), week 12 and at relapse (optional). Bloods for safety analysis and pregnancy test (if applicable) will be done at each visit, and vital signs will be measured at that time. Serum IgE, eosinophils, and serum cytokines will be done at baseline, and every 2 weeks until week 16, and at week 24. At each visit patients will be assessed for adverse events. Clinical assessment, and ultrasound, will be done at each visit. The most widely accepted clinical assessment tool is known as SCORAD (SCORing for Atopic Dermatitis). This tool combines clinical features of AD such as erythema, dryness, lichenification, percent body surface area, as well as quality of life issues such as pruritus and loss of sleep due to disease. Another assessment tool we will be using is the static IGA (investigator global assessment). The IGA represents an overall evaluation of dermatitis performed by the investigator at every visit. IGA scores utilize a 6-point scale, ranging from 0 (clear) to 5 (very severe disease). IGA scores measure disease severity based on morphology, without referring back to the baseline state. Ultrasound study provides an alternate, non-invasive method of assessing disease activity in the skin. Clinical photos will be done at weeks 0, 6, 12, 16, and 24.In this study, we would like to determine whether AD, like psoriasis, is an immune-driven disease of epidermal hyperplasia and differentiation. To establish the immune contribution to AD, we will treat patients with standard doses of CsA and measure the extent of immune suppression in skin lesions by quantitative measures of pathological leukocytes and expression of inflammatory gene products. At the end of 12 weeks of treatment we will determine whether pathological epidermal hyperplasia is reversed by quantitative and qualitative measures of epidermal hyperplasia and aberrant epidermal differentiation. In addition, we will correlate the extent to which the epidermal phenotype is modulated with the extent to which skin inflammation is suppressed, as the effect of suppression of specific inflammatory molecules on resulting keratinocyte responses is not known. The alternative hypothesis in AD is that it is not an immune-mediated disease, but instead a disease of primary epidermal differentiation due to germline alterations (gene deletions) in filaggrin and other genes that cooperate to differentiate a normal epidermal barrier at the level of stratum corneum. The alternative hypothesis is considered to be the most likely patho-mechanism in AD by a number of current researchers. The alternative hypothesis would be supported by this study if pathologic epidermal hyperplasia persists in the skin regions with significant suppression of the immune/inflammatory pathways induced by CsA treatment.