The protective function of the skin is mediated by the stratum corneum, the outermost layer of the skin, which is the end-product of epidermal differentiation. Previously, we showed that fetal rat skin explants complete the late-stage milestones of epidermal development when grown in a serum- and growth-factor-free medium, suggesting that endogenous metabolites could regulate the late program that leads to barrier formation. Because a variety of endogenous free fatty acids are known activators, peroxisome proliferator-activated receptor alpha (PPAR-alpha) is a potential candidate for this key regulatory role. Indeed, whereas PPAR-alpha expression is first noted at gestational day 13.5 and peaks between days 14.5 and 15.5, fatty acid synthesis is very active in fetal rodent epidermis peaking at gestational day 17. Furthermore, we have reported that both epidermal differentiation and stratum corneum formation in utero are stimulated by pharmacologic activation of PPAR-alpha. This study was designed to test whether PPAR-alpha plays a physiologic role in epidermal differentiation and stratum corneum formation in utero. In PPAR-alpha-/- mice we observed delayed stratum corneum formation between day 18.5 of gestation and birth. Concurrently, there was diminished beta-glucocerebrosidase activity at the stratum granulosum-stratum corneum junction and a modest decrease in both involucrin and loricrin protein expression, markers of keratinocyte differentiation. Both the number of stratum corneum cell layers was reduced and the processing of the lamellar bilayers was delayed in animals lacking PPAR-alpha, indicating a transient functional defect. In contrast, the lamellar body secretory system as well as rates of epidermal proliferation and cell death appeared normal in PPAR-alpha-/- mice. These results indicate that PPAR-alpha plays a physiologic role during fetal stratum corneum development. The transient and incomplete nature of the developmental delay, however, is consistent with regulation of the late stages of epidermal development by multiple factors.