The MHC class I-like protein CD1d is a nonpolymorphic molecule that plays a central role in development and activation of a subset of T cells that coexpress receptors used by NK cells (NK-T cells). Recently, T cells bearing NK receptors were identified in acute and chronic lesions of psoriasis. To determine whether NK-T cells could interact with epidermal cells, we examined the pattern of expression of CD1d in normal skin, psoriasis, and related skin disorders, using a panel of CD1d-specific mAbs. CD1d was expressed by keratinocytes in normal skin, although expression was at a relatively low level and was generally confined to upper level keratinocytes immediately beneath the lipid-rich stratum corneum. In contrast, there was overexpression of CD1d in chronic, active psoriatic plaques. CD1d could be rapidly induced on keratinocytes in normal skin by physical trauma that disrupted barrier function or by application of a potent contact-sensitizing agent. Keratinocytes displayed enhanced CD1d following exposure to IFN-γ. Combining CD1d-positive keratinocytes with human NK-T cell clones resulted in clustering of NK-T cells, and while no significant proliferation ensued, NK-T cells became activated to produce large amounts of IFN-γ. We conclude that CD1d can be expressed in a functionally active form by keratinocytes and is up-regulated in psoriasis and other inflammatory dermatoses. The ability of IFN-γ to enhance keratinocyte CD1d expression and the subsequent ability of CD1d-positive keratinocytes to activate NK-T cells to produce IFN-γ, could provide a mechanism that contributes to the pathogenesis of psoriasis and other skin disorders.