Glucosylceramides, delivered to the stratum corneum interstices by exocytosis of lamellar body contents, are enzymatically hydrolyzed to ceramides, which are major components of the lipid lamellar bilayers that mediate epidermal barrier function. Because this conversion is critical for permeability barrier homeostasis in the adult animal, in this study we measured the changes in activities of the enzymes responsible for the synthesis of glucosylceramide and its conversion to ceramide, UDP-glucose:ceramide glucosyltransferase (GC synthase) and beta-glucocerebrosidase (beta-GlcCer'ase), respectively, during fetal barrier formation. In epidermis from rats of gestational age 17-21 days, GC synthase activity peaked on day 19, prior to barrier competence, whereas beta-GlcCer'ase activity rose throughout barrier formation, exhibiting a 5-fold increase over this time period. beta-GlcCer'ase protein rose in parallel with activity, as did mRNA levels. Enzyme activities in skin explants from 17-day fetal rats, incubated up to 4 days in hormone- and serum-free media, paralleled those measured at corresponding time points in utero. Incubation with hormones that accelerate barrier development had minimal effects on GC synthase activity, whereas beta-GlcCer'ase activity was significantly increased after 1 or 2 days in culture. Finally, inhibition of beta-GlcCer'ase with conduritol B epoxide prevented barrier development in vitro and was accompanied by abnormalities in the lamellar bilayer ultrastructure of the stratum corneum. These data indicate that both synthesis and hydrolysis of glucosylceramide are regulated during fetal development. Furthermore, the enzymatic hydrolysis of glucosylceramide to ceramide is essential for fetal barrier ontogenesis.