Mutations in the gene for steroid sulfatase (SSase), are responsible for recessive x-linked ichthyosis (RXLI). As a consequence of SSase deficiency, its substrate, cholesterol sulfate (CSO4), accumulates in the epidermis. Accumulation of this amphipathic lipid in the outer epidermis provokes both a typical scaling phenotype and permeability barrier dysfunction. Research on RXLI has illuminated several, potentially overlapping pathogenic mechanisms and provided insights about the role of SSase and CSO4 in normal differentiation, barrier maintenance, and desquamation. We now show here that SSase is concentrated in lamellar bodies (LB), and secreted into the SC interstices, along with other LB-derived lipid hydrolases. There, it degrades CSO4, generating some cholesterol for the barrier, while the progressive decline in CSO4 (a serine protease (SP) inhibitor) permits corneodesmosome (CD) degradation leading to normal desquamation. Two molecular pathways contribute to disease pathogenesis in RXLI: 1) excess CSO4 produces nonlamellar phase separation in the stratum corneum (SC) interstices, explaining the barrier abnormality. 2) The increased CSO4 in the SC interstices inhibit activity sufficiently to delay CD degradation, leading to corneocyte retention. We also show here that increased Ca++ in the SC interstices in RXLI could contribute to corneocyte retention, by increasing CD and interlamellar cohesion. RXLI represents one of the best understood diseases in dermatology--from the gene to the SC interstices, its etiology and pathogenesis are becoming clear, and assessment of disease mechanisms in RXLI led to new insights about the role of SSase and CSO4 in epidermis terminal differentiation.