Targeted biologic agents have dramatically changed the therapeutic landscape for immune-mediated inflammatory diseases, particularly in rheumatology and dermatology. Their introduction has resulted in a paradigm shift, i.e., they produce significant clinical improvements in most patients with such diseases. Nevertheless, a variety of adverse reactions associated with these agents have been observed, including so-called paradoxical reactions (PRs), which are a new class of adverse events. PRs involve the de novo development or worsening of immune-mediated inflammatory disease during treatment with a targeted biologic agent that is commonly used to treat the idiopathic counterpart of the drug-induced reaction. In addition, the efficacy of biologic agents targeting individual cytokines and the existence of PRs to them have provided proof that cytokines are key drivers of various immune-mediated inflammatory diseases and helped researchers elucidate the molecular pathways underlying the pathophysiology of these diseases. Here, a comprehensive review of the targeted biologic agents used to treat immune-mediated inflammatory diseases, particularly psoriasis and atopic dermatitis, is provided, with a specific focus on biologic agents that inhibit cytokine signaling involving tumor necrosis factor-α, interleukin (IL)-12/23 (p40), IL-17A (and the IL-17 receptor [R]), IL-23 (p19), and the IL-4Rα, and their associated PRs. The characteristic clinical manifestations and potential immunological mechanisms of the PRs induced by these biologic agents are also reviewed.