Proteinase‐activated receptor‐2 (PAR‐2) is a G‐protein coupled receptor. Tryptic proteases cleave PAR‐2 exposing a tethered ligand (SLIGKV), which binds and activates the receptor. Although PAR‐2 is highy expressed by cultured keratinocytes and is an inflammatory mediator, its precise localization in the normal and inflamed human skin in unknown, and the proteases that activate PAR‐2 in the skin have not been identified. We localized PAR‐2 in human skin by immunohistochemistry, examined PAR‐2 expression by RT‐PCR and RNA blotting, and investigated PAR‐2 activation by mast cell tryptase. PAR‐2 was localized to keratinocytes, especially in the granular layer, to endothelial cells, hair follicles, myoepithelial cells of sweat glands, and dermal dendritic‐like cells. PAR‐2 was also highly expressed in keratinocytes and endothelial cells of inflamed skin. PAR‐2 mRNA was detected in normal human skin by RT‐PCR, and in cultured human keratinocytes and dermal microvascular endothelial cells by Northern hybridization. Trypsin, tryptase and a peptide corresponding to the tethered ligand (SLIGKVNG₂) increased [Ca²⁺]_i in keratinocytes, measured using Fura‐2/AM. Although tryptase‐containing mast cells were sparsely scattered in the normal dermis, they were numerous in the dermis in atopic dermatitis, and in the dermis, dermal‐epidermal border, and occasionally within the lower epidermis in psoriasis. Tryptase may activate PAR‐2 on keratinocytes and endothelial cells during inflammation.