Malassezia is a type of yeast (fungus) that causes itchy, flaky, oily skin in both humans and dogs. The type of fungus found in humans causes mild infection, like dandruff or athlete’s foot, but the type often found in dogs is much more difficult to deal with. The most common type found in dogs is Malassezia pachydermatis. These yeasts are found normally on the skin, but can become a serious problem for dogs who are immunocompromised or have some other underlying health issue.
Malassezia pachydermatis dermatitis in canines is a very uncomfortable skin infection and it will be probably be obvious that your pet is suffering extreme, nonstop itching if it has spread over their body. Typically at the shop we see it start in the ears and foot pads, then onto the face, belly, etc. until it has colonized the whole dog and they are just miserable. You will probably also notice inflammation, scaliness, oiliness, unusual pigmentation, and balding.
Because Malazzezia is naturally occurring on the skin, a skin scrape may not give a definitive diagnosis. Also, while you can treat it to make your pet comfortable, it is very likely they have some other kind of health issue going on that prevented their body from keeping the fungus at normal levels.
As far as treatment of the yeast organism, Tea Tree oil (Melaleuca alternifolia) is effective against some strains and is available in canine shampoos. Coal tar, found in “Tar and Sulfur” canine shampoos also works well. Shampoos made to treat human dandruff and fungal infection also help, and we have used these at the shop with good results. (These also smell much better than the old-school Tar and Sulfur which smells exactly like what it is) The primary active ingredients in these are selenium disulfide, ketoconazole, zinc pyrithione (ZPT), or miconazole. Wikipedia says low strength hydrogen peroxide can also be used but can cause scarring, and I have never seen this used in dog grooming so I’m not going to recommend that.