Caspase-14 is a nonapoptotic caspase family member whose expression in the epidermis is confined to the suprabasal layers, which consist of differentiating keratinocytes. Proteolytic activation of this caspase is observed in the later stages of epidermal differentiation. In psoriatic skin, a dramatic decrease in caspase-14 expression in the parakeratotic plugs was observed. Topical treatment of psoriatic lesions with a vitamin D3 analogue resulted in a decrease of the psoriatic phenotype and an increase in caspase-14 expression in the parakeratotic plugs. To investigate whether vitamin D3 directly affects caspase-14 expression levels, we used keratinocyte cell cultures. 1alpha,25-Dihydroxycholecalciferol, the biologically active form of vitamin D3, increased caspase-14 expression, whereas retinoic acid inhibited it. Moreover, retinoic acid repressed the vitamin D3-induced caspase-14 expression level. In addition, the use of organotypic skin cultures demonstrated that 1alpha,25-dihydroxycholecalciferol enhanced epidermal differentiation and caspase-14 activation, whereas retinoic acid completely blocked caspase-14 processing. Our data indicate that caspase-14 plays an important role in terminal epidermal differentiation, and its absence may contribute to the psoriatic phenotype.