The ubiquitin-editing enzyme A20 (tumor necrosis factor-alpha-induced protein 3) serves as a critical brake on nuclear factor kappa B (NF-kappa B) signaling. In humans, polymorphisms in or near the A20 gene are associated with several inflammatory disorders, including psoriasis. We show here that epidermis-specific A20-knockout mice (A20(EKO)) develop keratinocyte hyperproliferation, but no signs of skin inflammation, such as immune cell infiltration. However, A20(EKO) mice clearly developed ectodermal organ abnormalities, including disheveled hair, longer nails and sebocyte hyperplasia. This phenotype resembles that of mice overexpressing ectodysplasin-A1 (EDA-A1) or the ectodysplasin receptor (EDAR), suggesting that A20 negatively controls EDAR signaling. We found that A20 inhibited EDAR-induced NF-kappa B signaling independent from its de-ubiquitinating activity. In addition, A20 expression was induced by EDA-A1 in embryonic skin explants, in which its expression was confined to the hair placodes, known to be the site of EDAR expression. In summary, our data indicate that EDAR-induced NF-kappa B levels are controlled by A20, which functions as a negative feedback regulator, to assure proper skin homeostasis and epidermal appendage development.