The epidermis is a very active site of lipid metabolism, and all peroxisome proliferator-activated receptor (PPAR) and liver X receptor (LXR) isoforms are expressed in the epidermis. Activation of PPARalpha, -beta/delta, or -gamma or LXRs stimulates keratinocyte differentiation. Additionally, activation of these receptors also improves permeability barrier homeostasis by a number of mechanisms, including stimulating epidermal lipid synthesis, increasing lamellar body formation and secretion, and increasing the activity of enzymes required for the extracellular processing of lipids in the stratum corneum, leading to the formation of lamellar membranes that mediate permeability barrier function. The stimulation of keratinocyte differentiation and permeability barrier formation also occurs during fetal development, resulting in accelerated epidermal development. PPAR and LXR activation regulates keratinocyte proliferation and apoptosis, and studies have shown that these receptors play a role in cutaneous carcinogenesis. Lastly, PPAR and LXR activation is anti-inflammatory, reducing inflammation in animal models of allergic and irritant contact dermatitis. Because of their broad profile of beneficial effects on skin homeostasis, PPAR and LXR have great potential to serve as drug targets for common skin diseases such as psoriasis, atopic dermatitis, and skin cancer.