This is part of a normal process in which bacteria from the environment start to grow on a babys skin. It is unknown whether the immune response that causes erythema toxicum neonatorum is helpful to the baby. Recent research indicates an association with Demodex mites infestation (demodicosis). Diagnosis
Health professionals can diagnose erythema toxicum neonatorum with a skin exam. Most cases of erythema toxicum neonatorum can be diagnosed without further testing. If more testing is needed to make a diagnosis, the contents of a lesion can be examined under a microscope. A health professional may make a small cut into a pus-filled lesion and collect a swab of pus for testing. Lesions caused by erythema toxicum neonatorum contain eosinophils and other immune cells. These cells can be seen under a microscope when a special stain is applied to the sample.Since the appearance of erythema toxicum neonatorum varies, it may be confused with other newborn rashes. Some newborn infections cause bumps or boils, which may look like erythema toxicum neonatorum. Bacterial infections, including Staphylococcus and Streptococcus infections, almost always cause additional symptoms. These symptoms may be severe, and they are usually not limited to rash. Bacterial rashes can be diagnosed by testing pus from a lesion along with a blood sample. Bacteria can be seen under a microscope with a special stain or may be found on a culture. Fungal infection with Candida may also cause a similar rash in newborns, but it usually causes additional symptoms like thrush.
: 86 This form of acanthosis nigricans is more likely to involve mucous membranes (25–50% of cases) Malignant acanthosis nigricans that may either precede (18%), accompany (60%), or follow (22%) the onset of an internal cancer. : 506  Malignancy-associated acanthosis nigricans is usually rapid in onset and may be accompanied by skin tags, multiple seborrheic keratoses, or tripe palms. : 676

Acral acanthotic anomaly
Acral acanthotic anomaly refers to a variant of acanthosis nigricans limited to the elbows, knees, knuckles, and dorsal surfaces of the feet, in the absence of any other findings, in otherwise healthy individuals. While the etiology remains unknown, its presence does not suggest a likelihood of malignancy. Pathophysiology
Acanthosis nigricans is caused by increased activation of growth factor receptor proteins, usually due to endocrine dysfunction. This is most commonly insulin-mediated activation of IGF receptors on keratinocytes, as a result of hyperinsulinaemia or insulin resistance, as seen in diabetes mellitus.Factors involved in the development of acanthosis nigricans include:

Increased circulating insulin. This activates keratinocyte IGF receptors, particularly IGF-1. At high concentrations, insulin may also displace IGF-1 from insulin-like growth factor-binding protein (IGFBP). Increased circulating IGF may lead to keratinocyte and dermal fibroblast proliferation. In hereditary forms of acanthosis nigricans, fibroblast growth factor receptor (FGFR) defects
Increased transforming growth factor (TGF), which appears to be the mechanism for malignancy-associated acanthosis nigricans. TGF acts on epidermal tissue via the epidermal growth factor receptor (EGFR).