In this study we investigated whether hyaluronan (HA)-CD44 interaction influences epidermal structure and function. Our data show that CD44 deficiency is accompanied by reduction in HA staining in CD44 knockout (k/o) mouse skin leading to a marked thinning of epidermis versus wild-type mouse skin. A significant delay in the early barrier recovery (following acute barrier disruption) occurs in CD44 k/o versus wild-type mouse skin. To assess the basis for these alterations in CD44 k/o mouse epidermis, we determined that differentiation markers are greatly reduced in the epidermis of CD44 k/o versus wild-type mice, while conversely HA binding to CD44 triggers differentiation in cultured human keratinocytes. CD44 downregulation (using CD44 small interfering RNAs) also inhibits HA-mediated keratinocyte differentiation. Slower barrier recovery in CD44 k/o mice could be further attributed to reduced lamellar body formation, loss of apical polarization of LB secretion, and downregulation of cholesterol synthesis. Accordingly, HA-CD44 binding stimulates both LB formation and secretion. Together, these observations demonstrate new roles for HA-CD44 interaction in regulating both epidermal differentiation and lipid synthesis/secretion, which in turn influence permeability barrier homeostasis. HA-CD44 signaling could comprise a novel approach to treat skin disorders characterized by abnormalities in differentiation, lipid synthesis, and/or barrier function.