One of the primary functions of skin is to form a defensive barrier against external infections and water loss. Disrupted barrier function underlies the most severe and often lethal form of recessive congenital ichthyosis, harlequin ichthyosis (HI). HI is associated with mutations in the gene that encodes the ABC transporter protein, ABCA12. We have investigated the morphological and biochemical alterations associated with abnormal epidermal differentiation and barrier formation in HI epidermis. An in vitro model of HI skin using human keratinocytes retrovirally transduced with shRNA targeting ABCA12 in a three-dimensional, organotypic co-culture (OTCC) system has also been developed. A robust reduction in ABCA12 expression had a dramatic effect on keratinocyte differentiation and morphology comparable with that observed in HI skin, including a thicker epidermis and abnormal lipid content with a reduction in nonpolar lipids. As seen in HI epidermis, proteins that are normally expressed in late differentiation were highly dysregulated in the ABCA12-ablated OTCC system. These proteins were expressed in the stratum basale and also in the stratum spinosum, indicative of a premature terminal differentiation phenotype. Expression of the proteases kallikrein 5 and cathepsin D was dramatically reduced in both HI epidermis and the OTCC model. These data suggest that ABCA12 is a key molecule in regulating keratinocyte differentiation and transporting specific proteases associated with desquamation.