We as humans like our skin to be intact. It protects everything inside the body from various diseases, and contains a great quantity of nerve endings — meaning that to have it forcibly removed is excruciatingly painful, and being stripped of enough of it will lead to a horribly slow death. As a result, flaying is the signature method of Cold-Blooded Torture for some of the very worst of the worst among villains.
Scalping is a form of this that was particularly prevalent in Injun Country— where it was the accepted means of proving a bounty on a Native to a settler government... In real life it was probably more common to take the scalp from a dead foe than from a living one, as their main purpose was to turn in for bounty (more portable than the whole skin.) But there were certainly some documented cases of people surviving a scalping.
For examples of... reusing the skin see Genuine Human Hide.
And if you feel the need for a bit of Soundtrack Dissonance, sing the title to the tune of The Bee Gees' "Stayin' Alive".
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Anime & Manga
Taken Up to Eleven in the seinen manga Burning Hell. One of the two villain protagonists is a Korean military medic turned serial killer who has this as his modus operandi, priding himself from his ability of keeping his victims alive through the whole process. When sent to a remote island as a punishment, he made a waxhouse-like garden out of the posed and preserved bodies of all the other convicts sent there. Then he tops that when it turns out he can do the same using a sword instead of a scalpel — an over-the-top variation of a Clean Cut that blows his opponent's whole skin clean off his body.
An episode of Ghost in the Shell: Stand Alone Complex features a serial killer who removes the skin of women in the shape of a T-shirt. It turns out he was one among many who were ordered to use the technique as a strategic terror weapon. Batou found the unfortunate survivors, and wasn't very happy...
In the Yu-Gi-Oh! manga, Dark Marik uses the Millennium Rod knife to skin his father, removing the sacred tattoos from his back, then kill him. The father, however, had been stabbing Rishid with red-hot knives just before this, so no one should feel too sorry for him...
In Soul Eater, Shinigami skinned Asura alive and made a bag out of it to be his prison.
Also used in the Retribution arc to a priest of the Holy See.
Magic: The Gathering: The Machine Orthodoxy, New Phyrexia's white-aligned faction, is especially fond of doing this to friend and foe alike. The flavor text of Inquisitor Exarch illustrates it best.
"Skin is the prison of the blessed and the stronghold of the heretic."
—Argent Etchings, plate 64, passage 17
Exaggerated in Preacher. The Saint of Killers is so full of pure hate that when he dies and goes to Hell, his mere presence freezes everything in its wake. So the Devil attempts to flay the hatred out of him, whipping him on the back until there's nothing but bone left. It doesn't work.
Also, shortly before his death, the Preacher came across a group of bandits celebrating mass murder, the leader of which having just scalped a live man.
Hack/Slash villain Doctor Gross apparently did this to himself. According to his bio in the back of the first ombinust collection, this was one of his trademarks as a serial killer.
In Avengers Academy, Mettle's powers were first revealed when he got into a surfing accident and some of his skin peeled away to reveal a super-powered metallic form underneath it. Norman Osborne "helped" Mettle by cutting off all of his skin to transform him into a Chrome Champion. Mettle does this to himself again after he was cured since his friends will need his help.
Inverted in Requiem Chevalier Vampire: the Archeologists, when choosing a human skin to wear, simply puree everything inside the skin and pump it out, wearing the skin like a bodysuit.
Pages Of Harmony arguably has it worse, as not only Rainbow Dash, but every single one of Twilight's friends gets this through scalping - except for poor Spike who gets the full Flaying Alive treatment. Too make it worse, it could have been avoided in Spike's case if only Twilight hadn't considered him a threat.
So; leave it to Bleach to have Mayuri operate on Ulquiorra, awake, done just to see what makes Arrancars tick.
David Lo Pan: Mr. Burton, if you have an influence over your youthful friend, you better exert it now. Otherwise I will send both of you to the hell where people are skinned alive! It's that simple, understand?
Happens quite a bit in the various Hellraiser movies, victims often partially to fully flayed, and some Cenobites bear the result of it as well. Those who come back from hell are an inversion; their skin is last to regenerate over their exposed muscles and veins.
Since the Devil ruined Erik's face after making a deal with him in The Phantom of the Opera (1989), he has to constantly reconstruct his face from strips of skin that he takes from his flayed victims.
Wishmaster: In the Djinn's palace in Hell, he is having one of the souls he collected tortured by slicing off the skin on the man's torso and stretching it out with hooks to expose all his innards.
This is a tradition of House Bolton in A Song of Ice and Fire, who are based at the Dreadfort and whose sigil is an image of a flayed man. Roose Bolton does it as punishment. His bastard son Ramsay does it for fun. They've been doing it for centuries... and, one of the nastier rumours that may prove itself all too true is that they keep the skins (or parts thereof) of prominent victims and preserve them in the keep of the Dreadfort. Alongside other, more traditional trophies of war and what have you. Nice.
In Iain M. Banks' Use of Weapons, the villain and protagonist Elethiomel was fond of this. "The first messenger we personally sent came back without his skin!"
Various characters in Sword of Truth suffer this fate. In the second book, two graduates of the Wizarding School, who have been lifelong friends for hundreds of years, are informed that one of them will be forcibly conscripted into the service of the Keeper, and will have to flay his friend alive as part of his initiation.
Flaying in this case has an actual use: it allows one wizard to steal the power of another.
The Big Bad of one of the Anita Blake novels does this to the Rafael, king of the wererats, in part because the villains couldn't control the rats without his participation, but mostly For the Evulz. He only survives because of the preternatural healing abilities of lycanthropes.
In Polystom, two deserters convicted of murdering an aristocrat are executed using a device called a "skin-frame": their skin is cut around their ankles and attached to hooks and they are forced to hang onto the frame until their arms tire and they let go.
The short story The Anatomy of Desire by John Theureux is about a man who was skinned and is still alive, and falls in love with a nurse at the hospital.
This is a favored tactic of the Black Mages from the Mithgar books; their victims need to be in pain in order for the Mages to wrench the life essence needed to power their spells, and so most become adept Torture Technicians. This is a particularly common form of it, and at least one character, Baron Stoke, was almost a junkie getting his fix by flaying his prisoners and leeching their life-force.
In Boris Starling's Messiah the serial killer Silver Tongue flays a man named Bart Miller alive. The police later discover that Silver Tongue is murdering men based on how the apostles died and Bart Miller was unlucky enough to share his name with St. Bartholomew - who was flayed alive.
In The Black Gryphon, the Big Bad Ma'ar had invented a spell that flayed whatever it hit. Most people to end up on the receiving end of it die of blood loss.
In Larry McMurtry's novel Comanche Moon this was one of the methods used by the Mexican Big Bad to torture his prisoners.
In Mirror Dance by Lois McMaster Bujold, one of the tortures used by Baron Ryoval on Mark Vorkosigan is spraying his skin with a chemical that slowly eats it away.
In The Dresden Files novel Turn Coat, Shagnasty the skinwalker tortures Thomas by tearing off strips of his skin and wearing out his regenerative energy to make him hungry enough to feed on humans again, for no other reason than to hurt Harry.
In The Master and Margarita, when Margarita apologises to the demon Azazello for being naked in front of him (It Makes Sense in Context), he reassures her that he's totally fine with it, for he'd seen not only naked women, but also completely flayed ones.
Used with great enthusiasm in the opening of the Night Lords book Blood Reaver.
A tiger demon does this to himself in Journey to the West before standing up. Apparently, because that's his real form, a partly-skinned tiger-man.
The villainess of J.T. Edson's A Town Called Yellowdog suffers permanent insanity after a tribe of Kiowa Indians take revenge on her brother for the rape and murder of one of their women. The final chapter is spoilered with the title "She Saw Her Brother Skinned Alive".
This is how Blayce the Gallan deals with disobedience in Protector of the Small, though Stenmun carries it out. Disobedience can be smuggling poppy to children who are about to be murdered to power his killing devices. Kel and her retinue see a number of rotting victims hanging in cages from the castle walls.
Pearl Skinner, Big Bad of the second Provost's Dog book, is known for this, so much so that Beka assumes "Skinner" is a boastful title. (It's actually Pearl's real family name; her father was a butcher.)
Happened off-camera to Count Video during the Nightside's Angel War. He's seen chasing his own animated skin, weeping and leaving bloody footprints, through the burning streets.
In Ken Follet's World Without End a thief is skinned with no detail of the process left out.
In the Young Bond novel By Royal Command, Dr. Perseus Friend plans to skin Bond alive while forcing Bond's girlfriend Roan to watch.
In the end of Alex CrossCat And MouseThomas Pierce aka Mr. Smith does this to himself.
The third season of Dexter featured a serial killer known as The Skinner.
In one of the final episodes of Buffy the Vampire Slayer Season 6, Willow, in full-on snap-out mode after Tara's death, does this to Warren, Tara's killer, when she catches up to him. It was fairly gruesome for standard television, but he didn't survive for very long after his skin had been removed (mainly because she then followed up by burning him). He got better in the comics continuation, though. Somewhat he still had no skin, and was being kept alive by magic. When magic ended, he died instantly.
Then, in the Season 7 episode Same Time, Same Place, the demon Gnarl rips its victims' skin off in strips, and eats it, while the victim is still alive. It's in the process of eating Willow's skin (irony?) when Buffy catches up with it, and kills it.
Not just irony: since Willow accidentally set up the whole "she and the Scoobies can't see each other" just by convincing herself that she couldn't face them after what she did, did she accidentally create the whole Gnarl situation by convincing herself that she deserved to be punished for flaying Warren?
Glory threatened to do this to Spike in Season 5 (think I can do it all in one strip, like an apple?) but doesn't make it very far.
The Skin Taker in Candle Cove often threatened Pirate Percy and Janice — although he couldn't get away with it on a kids' show.
Reavers from Firefly are rumored to skin their victims to make clothes out of their skins. If victims are very lucky, this happens after they are already dead.
The X-Files episode "Hellbound" has a serial killer who prefers to flay his victims alive. Reyes feels especially drawn to the case because it turns out the whole thing is a repeat from history, with the victims, killer, and investigator from an old crime sentenced to play it all out again via the cycle of reincarnation.
Done very graphically in The River, thanks to a really vengeful demon.
In the Being Human (Remake) episode "I've Got You Under Your Skin", Suren flays Henry alive, or rather undead, as punishment for cheating on her.
In the Masters Of Horror episode "Pick Me Up", the serial killer Walker ties one of his victims up in a motel room and cuts off large parts of her skin until she dies.
SCP Foundation, SCP-1707 ("New Skin"). SCP-1707 is a colony of worms that can completely remove the skin of any creature. Once the skin is removed, SCP-1707 replaces the creature's skin.
Religion, Folklore, and Mythology
The satyr Marsyas challenged Apollo to a music contest, flute against lyre. There are several versions (either Apollo made a new condition that made it impossible for Marsyas to keep up, like singing or playing the instrument upside-down; or the judge was Midas who declared Marsyas the winner), but both end in the same way: Apollo flays Marsyas alive.
The apostle Bartholomew is said to have been flayed alive by an Armenian prince after the latter's brother, the king, converted to Christianity; and indeed, he is often represented in art as holding his own flayed skin◊.
The Scottish faerie known as Nuckelavee is a skinless man fused to a skinless horse.
In the Aztec religion, celebrations to Xipe Totec, the god of fertility, required that sacrifices be flayed alive during the Vernal Equinox. The priests would then go about in the skins for some time.
The Dark Eldar use flaying as a standard torture technique.
Necron Flayed Ones have this as their signature ability. They use their long flensing knive-like talons to skin their victims and then they wear the skin as a terror tactic. It works. They also like burrowing out of the ground while wearing the skins of their new victims friends. Flayed Ones have no concept of 'torture', however, and their victims tend to be quite dead by the time they go to work.
Chaos is unique in that they have learned how to power warmachines by ritually flaying someone. The victim is put in the machine the machine is promptly locked in every way possible to prevent the daemon doing the flaying from escaping. Then they hope the cannibalised dreadnought charges the enemy lines rather than their own.
In the Horus Heresy novels, Horus punishes Erebus by quite literally peeling his face off.
In Warhammer there was a Dogs of War unit called Mengil Manhide's Manflayers. They were Dark Elves who flayed their victims alive and wore their skins as cloaks. They still get nods in the fluff, even though Dogs of War were phased out in newer editions.
In the Eberron setting of Dungeons & Dragons, members of Dragonmarked Houses who commit a terrible crime against the House would be expelled from membership. This was known as "excoriation," after the (mostly) discontinued practice of having the shamed member's Dragonmark flayed from the skin. If the excoriate survived, the Mark would grow back elsewhere, but would be very painful to use.
Monks dedicated to the Mockery would flay themselves as a ritual.
In the Planescape setting of Dungeons & Dragons, this is often the fate of those who run afoul of Sigil's de facto ruler, the mysterious Lady of Pain.
Although to be fair to her, this is not a method of torture, but of execution: Anyone whom the Lady's shadow falls on dies quite instantaneously (if painfully).
Some sicko from Shadowrun posted a shadowtalk comment about how, having captured a wereleopard, he'd been skinning it alive every few days, selling the valuable pelt, then waiting for it to regenerate so he can skin it again. Eventually it managed to slip its freshly-skinned, bloody form between its cage's bars and escape.
In Mass Effect 2 you walk in on Liara threatening a person with this, in a channeling of her mother Benezia. This showcases what Liara has become following her two-year Roaring Rampage of Revenge upon the Shadow Broker for trying to sell Shepard's body to the Collectors.
A few fatalities in the Mortal Kombat series flay instead of directly kill. Unsurprisingly, they are among the cooler looking ones.
In an Itchy and Scratchyepisode, Itchy nails Scratchy's feet to an escalator, which peels away his fur and skin, but doesn't kill him. Later on, the skinless cat is wearing his fur as if it were a coat, and then is beaten to death by anti-fur militants.
Non-torture usage: In cases of severe or extensive burns, doctors may have to perform what is called a debridement - that is, removing the dead skin so that healthy skin may regrow, by either scrubbing at or peeling the burns. The exposed dermis is likely to complain regardless.
Removal of sections of skin is necessary in many plastic-surgery procedures, or when skin must be harvested from other areas to cover third-degree burns. In amputations, the surgeon may salvage skin from the amputated appendage to cover the stump.
According to Herodotus, the Achaemenid Persian shah Cambyses did this to a judge who was found guilty of corruption: He then proceeded to have the judge's skin upholstered onto the judge's seat, and then forced his son to succeed his father as judge. Granted, this is Herodotus, but on the other hand, this isn't too far off of more recent sentences by Middle Eastern despots that can be more easily verified...
The Assyrians used to punish people by doing this to their children.
Accidental flaying, as when someone's hair gets caught in machinery and their scalp is torn off, is known as "de-gloving".
Pierre Basile, a young crossbowman, managed to kill Richard The Lion Heart in 1199. Mercadier, Richard's mercenary captain and right-hand-man, was not particularly pleased to have his 15-year-old working relationship end this way. He retaliated by having Pierre flayed alive.
This was sometimes done with suspected werewolves, while evidence of wolf hair was searched for in the skin.
This trope is why, despite the stereotype, duct tape is not popular with Drag performers.
This is what allegedly happened to Russian soldiers captured by the Mujahideen during the Soviet Invasion of Afghanistan. Their skin was cut off and lifted upwards like a T-Shirt, and they were displayed to scare off their comrades.
This is one expected result of dragging a person behind a horse or motor vehicle.
This is a common result when housecats "play" with rabbit kits.