The insulin-like growth factor 1 receptor (IGF-1R) is a multifunctional receptor that mediates signals for cell proliferation, differentiation, and survival. Genetic experiments showed that IGF-1R inactivation in skin results in a disrupted epidermis. However, because IGF-1R-null mice die at birth, it is difficult to study the effects of IGF-1R on skin. By using a combined approach of conditional gene ablation and a three-dimensional organotypic model, we demonstrate that IGF-1R-deficient skin cocultures show abnormal maturation and differentiation patterns. Furthermore, IGF-1R-null keratinocytes exhibit accelerated differentiation and decreased proliferation. Investigating the signaling pathway downstream of IGF-1R reveals that insulin receptor substrate 2 (IRS-2) overexpression compensates for the lack of IGF-1R, whereas IRS-1 overexpression does not. We also demonstrate that phosphatidylinositol 3-kinase and extracellular signal-regulated kinase 1 and 2 are involved in the regulation of skin keratinocyte differentiation and take some part in mediating the inhibitory signal of IGF-1R on differentiation. In addition, we show that mammalian target of rapamycin plays a specific role in mediating IGF-1R impedance of action on keratinocyte differentiation. In conclusion, these results reveal that IGF-1R plays an inhibitory role in the regulation of skin development and differentiation.