Psoriasis is a T cell-mediated inflammatory disease characterized by hyperproliferation and by aberrant differentiation. We found cathepsin D and zinc-alpha(2)-glycoprotein, two catalytic enzymes associated with apoptosis and desquamation, to be present in the stratum corneum of the normal epidermis but absent from the psoriatic plaque. Psoriasis is characterized by an altered response to interferon-gamma (IFN-gamma), including the induction of apoptosis in normal but not in psoriatic keratinocytes, often with opposite effects on gene expression of suprabasal proteins. We found that IFN-gamma binding and signaling were attenuated in psoriasis: The IFN-gamma receptor, the signal transducer and activator of transcription STAT-1, and the interferon regulatory factor IRF-1 were strongly up-regulated by IFN-gamma in normal keratinocytes, but not in psoriatic ones. IFN-gamma strongly up-regulated the expression of the catalytic enzymes cathepsin D and zinc-alpha(2)-glycoprotein in normal keratinocytes but down-regulated them in psoriatic ones; the reverse was true of the apoptotic suppressor bcl-2. We believe that the aberrant response to IFN-gamma plays a central role in the pathophysiology of psoriasis, particularly the disruption of apoptosis and desquamation.