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1 Skin diseases like eczema and scabies can also cause red itchy palms. 2  Bumps and exfoliation of palmer skin is observed in these conditions. 3  Bacterial and fungal infection of palms can be a reason for itchy palms. 4  Dry skin of palms can be a reason for itchy palms.
There are many causes for peeling palms, according to Dr. Lawrence E. Gibson, a dermatologist with the Mayo Clinic. They include: excessive sweating, very dry skin, fungal infections, sunburn and reactions to medications. In rare cases, peeling skin could also be a symptom of an illness called Kawasaki disease.