We previously demonstrated that the epidermal-specific glycosylphosphatidylinositol (GPI)-anchor-deficient mice, generated by Pig-a gene disruption (Pig-a null mice), exhibited wrinkled and dry skin with hyperkeratosis and abnormal differentiation, and they died within a few days after birth. Here, we investigated the basis for the early demise of these animals, and the potential role of epidermal structural and biochemical abnormalities. The rapid demise of these animals was associated with both diminished epidermal permeability barrier function and decreased stratum corneum (SC) water content. The barrier abnormality could be attributed abnormal internal contents of lamellar bodies, with a downstream failure to generate normal extracellular lamellar bilayers in the SC. Moreover, processing profilaggrin to its monomeric form was impaired in Pig-a null mouse epidermis, while levels of the differentiation-specific proteins, involucrin, loricrin and profilaggrin were normal. Failure of filaggrin processing was accompanied by decreased activity of protein phosphatase 2A, an enzyme involved in profilaggrin to filaggrin processing. Thus, these studies demonstrate a critical role for GPI anchor and GPI-anchored proteins in divergent arms of epidermal terminal differentiation. While the permeability barrier abnormality can be attributed to defects in the lamellar body secretory system, the hydration abnormality is, in part, due to lack of availability of filaggrin-derived proteolytic products. Finally, since the dual abnormalities in the lamellar body secretory system and filaggrin processing resemble two key features of human Harlequin ichthyosis, Pig-a null mice could provide an appropriate analog for further studies of this disease.