Dehydrated skin is a condition that occurs when the skin loses more water than it takes in. This is a common problem, especially during the summer months or in dry climates. It can also be caused by certain medications, such as diuretics, or from a lack of sleep.   The skin’s appearance changes and it becomes rough and dry. The underlying layers of the skin may start to flake off and become irritated. In severe cases, you may notice red patches on your skin or even small cracks on your hands and feet.