One of the biological characteristics of psoriasis is excessive flaking of the skin. This is directly related to the marked hyperplasia of epidermal keratinocytes and to incomplete epidermal differentiation. Keratinocyte growth factor (KGF), a potent mitogen for human keratinocytes, is expressed by stromal cells. Alterations in the KGF signaling pathway might account for the epidermal hyperplasia associated with psoriasis. To test this hypothesis, we investigated the expression of KGF and its receptor (KGFR) in psoriasis tissue. KGF and KGFR mRNA levels were found to be frequently elevated in psoriatic skin specimens as compared with normal skin. Increased KGF transcript expression was localized to the dermal layer of the involved skin specimen using in situ hybridization. In contrast, KGFR transcript and protein expression was localized to the basal layer of keratinocytes in normal skin and to the basal and suprabasal layers of the psoriatic epidermis, coincident with the expanded proliferative keratinocyte pool. To identify molecules that might regulate KGFR expression we investigated the effects of various pharmacological agents and cytokines on KGFR synthesis by keratinocytes. Phorbol ester, interleukin-6, interferon-gamma, and ultraviolet B (UVB) treatment all led to substantial down-regulation of KGFR expression. The down-regulation of KGFR synthesis by UVB suggests a possible mechanism for the antiproliferative action of this agent in the treatment of psoriasis. Taken together, these results suggest that increased KGFR-mediated signaling in keratinocytes in the lesional epidermis might account in part for the epidermal hyperplasia in psoriasis.