Objective To explore the effectiveness of fire needle in the treatment of disfigurating dermatosis (DDS) and its effect on the psychological state of patients. Methods A total of 100 patients with DDS admitted to our hospital from July 2022 to May 2024 were selected as the research objects. They were randomly divided into control group and observation group, with 50 patients w in each group. The control group was treated with CO2 laser, and the observation group was treated with fire needle. The TCM syndrome scores, skin lesion status, psychological status, skin barrier function and therapeutic effect were compared between the two groups. Results After treatment, the scores of dry tingling, facial itching, facial flushing and burning, pulse sinking, pale tongue and water slide in the observation group were lower than those in the control group (P <0.05). The scores of skin lesion color, skin lesion type and seborrheic condition in the observation group were lower than those in the control group (P <0.05). After treatment, the scores of SAS and SDS in the observation group were lower than those in the control group (P <0.05). After treatment, TWEL and SAPC in the observation group were lower than those in the control group, and WCSC was higher than that in the control group (P <0.05). The total effective rate of treatment in the observation group was 96.00%, which was higher than 74.00% in the control group (P <0.05). Conclusion Fire needle therapy for DDS can improve TCM syndrome score and skin condition, relieve psychological pressure and improve skin barrier function, with better curative effect.