This review summarizes recent data on the keratinocyte, the major cell type in the epidermis. A two-state model is proposed: in the "resting" state, the keratinocyte is committed to a program of terminal differentiation focusing on production of an efficient barrier, the stratum corneum, and of the epidermal basement membrane; the activated state, first discovered in cell culture studies, occurs in vivo during epidermal wound healing and inflammatory skin diseases.