The permeability barrier is required for terrestrial life and is localized to the stratum corneum, where extracellular lipid membranes inhibit water movement. The lipids that constitute the extracellular matrix have a unique composition and are 50% ceramides, 25% cholesterol, and 15% free fatty acids. Essential fatty acid deficiency results in abnormalities in stratum corneum structure function. The lipids are delivered to the extracellular space by the secretion of lamellar bodies, which contain phospholipids, glucosylceramides, sphingomyelin, cholesterol, and enzymes. In the extracellular space, the lamellar body lipids are metabolized by enzymes to the lipids that form the lamellar membranes. The lipids contained in the lamellar bodies are derived from both epidermal lipid synthesis and extracutaneous sources. Inhibition of cholesterol, fatty acid, ceramide, or glucosylceramide synthesis adversely affects lamellar body formation, thereby impairing barrier homeostasis. Studies have further shown that the elongation and desaturation of fatty acids is also required for barrier homeostasis. The mechanisms that mediate the uptake of extracutaneous lipids by the epidermis are unknown, but keratinocytes express LDL and scavenger receptor class B type 1, fatty acid transport proteins, and CD36. Topical application of physiologic lipids can improve permeability barrier homeostasis and has been useful in the treatment of cutaneous disorders.