Kojic acid is a mushroom extract that has quickly become an extremely popular skin treatment to fade liver spots, melasma, freckles, acne scars and other skin discolorations. Today it is appears in kojic acid lotion, cream, and soap. It’s considered to be a natural alternative to the chemical compound called hydroquinone. Although it does not appear to have carcinogens, it does seem to cause irritation on sensitive skin, or after prolonged use, even on normal skin. In order to counter this side effect, some products also include a topical corticosteroid to reduce inflammation.