Psoriasis is a chronic inflammatory disorder of the skin characterized by epidermal hyperplasia and infiltration of leukocytes into the dermis and epidermis. T cell-derived cytokines, such as IFN-γ and IL-17A, play a major role in the psoriasis-associated epidermal hyperplasia, even though factors/mechanisms that regulate the production of these cytokines are not fully understood. We have recently shown that IL-21 is synthesized in excess in psoriatic skin lesions and causes epidermal hyperplasia when injected intradermally in mice. Moreover, in the human psoriasis SCID mouse model, neutralization of IL-21 reduces both skin thickening and expression of inflammatory molecules, thus supporting the pathogenic role of IL-21 in psoriasis. However, the basic mechanism by which IL-21 promotes skin pathology remains unknown. In this study, we show that CD4+ cells accumulate early in the dermis of IL-21–treated mice and mediate the development of epidermal hyperplasia. Indeed, IL-21 fails to induce skin damage in RAG1-deficient mice and CD4+ cell-depleted wild-type mice. The majority of CD4+ cells infiltrating the dermis of IL-21–treated mice express IFN-γ and, to a lesser extent, IL-17A. Studies in cytokine knockout mice show that IFN-γ, but not IL-17A, is necessary for IL-21–induced epidermal hyperplasia. Finally, we demonstrate that IFN-γ–producing CD4+ cells infiltrating the human psoriatic plaque express IL-21R, and abrogation of IL-21 signals reduces IFN-γ expression in cultures of psoriatic CD4+ cells. Data indicate that IL-21 induces an IFN-γ–dependent pathogenic response in vivo, thus contributing to elucidate a mechanism by which IL-21 sustains skin-damaging inflammation.