Mutations in SPINK5, encoding the serine protease inhibitor LEKTI, cause Netherton syndrome, a severe autosomal recessive genodermatosis. Spink5(-/-) mice faithfully replicate key features of Netherton syndrome, including altered desquamation, impaired keratinization, hair malformation and a skin barrier defect. LEKTI deficiency causes abnormal desmosome cleavage in the upper granular layer through degradation of desmoglein 1 due to stratum corneum tryptic enzyme and stratum corneum chymotryptic enzyme-like hyperactivity. This leads to defective stratum corneum adhesion and resultant loss of skin barrier function. Profilaggrin processing is increased and implicates LEKTI in the cornification process. This work identifies LEKTI as a key regulator of epidermal protease activity and degradation of desmoglein 1 as the primary pathogenic event in Netherton syndrome.