Caspase-14 is a protease that is mainly expressed in suprabasal epidermal layers and activated during keratinocyte cornification. Caspase-14-deficient mice display reduced epidermal barrier function and increased sensitivity to UVB radiation. In these mice, profilaggrin, a protein with a pivotal role in skin barrier function, is processed correctly to its functional filaggrin (FLG) repeat unit, but proteolytic FLG fragments accumulate in the epidermis. In wild-type stratum corneum, FLG is degraded into free amino acids, some of which contribute to generation of the natural moisturizing factors (NMFs) that maintain epidermal hydration. We found that caspase-14 cleaves the FLG repeat unit and identified two caspase-14 cleavage sites. These results indicate that accumulation of FLG fragments in caspase-14(-/-) mice is due to a defect in the terminal FLG degradation pathway. Consequently, we show that the defective FLG degradation in caspase-14-deficient skin results in substantial reduction in the amount of NMFs, such as urocanic acid and pyrrolidone carboxylic acid. Taken together, we identified caspase-14 as a crucial protease in FLG catabolism.