The major keratins of differentiating epidermal cells, keratins 1 and 10 (K1 and K10), require a preexisting cytoskeleton of K5 and K14 to form a cytokeratin filament network. The expression of K1 and K10 is regulated by an increase in intracellular Ca2+, probably at the level of endoplasmic reticulum Ca2+ stores. Activation of protein kinase C inhibits expression of K1 and K10 and induces expression of the later markers of keratinocyte maturation, loricrin, filaggrin and epidermal transglutaminase. Thus, protein kinase C regulates the terminal stage of epidermal maturation. During Ca2+ induced terminal differentiation, changes in quantity and subcellular localization of protein kinase C alpha, delta and eta indicate these isoforms are critical to the maturation program. Activation of protein kinase C is likely related to an increase in diacylglycerol in maturing keratinocytes due to activation of phospholipase C gamma1, delta1, and beta3. Epidermal differentiation is also associated with an enhanced transcriptional activity of the p53 tumor suppressor gene, suggesting that p53 contributes to the keratinocyte maturation program. Compartmentalized expression of TGFbeta1 in basal cells and TGFbeta2 in suprabasal cells is also linked to compartmentalized function, as TGFbeta1 null transgenic mice have basal cell hyperproliferation but the skin is not hyperplastic. Studies on paracrine growth regulation by keratinocyte growth factor (KGF) indicate this cytokine is expressed by dermal cells and stimulates growth of epidermal cells by inducing the expression of epidermal TGFalpha and subsequent autocrine stimulation of growth. Cytokine interactions among dermal papilla cells and hair follicle buds also appear to regulate the development of mature hair follicles by stimulating the elaboration and activation of procollagenases.