Comparative gene identification-58 (CGI-58), also designated as alpha/beta-hydrolase domain containing-5 (ABHD-5), is a lipid droplet-associated protein that activates adipose triglyceride lipase (ATGL) and acylates lysophosphatidic acid. Activation of ATGL initiates the hydrolytic catabolism of cellular triacylglycerol (TG) stores to glycerol and nonesterified fatty acids. Mutations in both ATGL and CGI-58 cause "neutral lipid storage disease" characterized by massive accumulation of TG in various tissues. The analysis of CGI-58-deficient (Cgi-58(-/-)) mice, presented in this study, reveals a dual function of CGI-58 in lipid metabolism. First, systemic TG accumulation and severe hepatic steatosis in newborn Cgi-58(-/-) mice establish a limiting role for CGI-58 in ATGL-mediated TG hydrolysis and supply of nonesterified fatty acids as energy substrate. Second, a severe skin permeability barrier defect uncovers an essential ATGL-independent role of CGI-58 in skin lipid metabolism. The neonatal lethal skin barrier defect is linked to an impaired hydrolysis of epidermal TG. As a consequence, sequestration of fatty acids in TG prevents the synthesis of acylceramides, which are essential lipid precursors for the formation of a functional skin permeability barrier. This mechanism may also underlie the pathogenesis of ichthyosis in neutral lipid storage disease patients lacking functional CGI-58.