11β-Hydroxysteroid dehydrogenase 1 (11β-HSD1) catalyzes the interconversion of cortisone and cortisol within the endoplasmic reticulum. 11β-HSD1 is expressed widely, most notably in the liver, adipose tissue, and central nervous system. It has been studied intensely over the last 10 years because its activity is reported to be increased in visceral adipose tissue of obese people. Epidermal keratinocytes and dermal fibroblasts also express 11β-HSD1. However, the function of the enzymatic activity 11β-HSD1 in skin is not known. We found that 11β-HSD1 was expressed in human and murine epidermis, and this expression increased as keratinocytes differentiate. The expression of 11β-HSD1 by normal human epidermal keratinocytes (NHEKs) was increased by starvation or calcium-induced differentiation in vitro. A selective inhibitor of 11β-HSD1 promoted proliferation of NHEKs and normal human dermal fibroblasts, but did not alter the differentiation of NHEKs. Topical application of selective 11β-HSD1 inhibitor to the dorsal skin of hairless mice caused proliferation of keratinocytes. Taken together, these data suggest that 11β-HSD1 is involved in tissue remodeling of the skin. This hypothesis was further supported by the observation that topical application of the selective 11β-HSD1 inhibitor enhanced cutaneous wound healing in C57BL/6 mice and ob/ob mice. Collectively, we conclude that 11β-HSD1 is negatively regulating the proliferation of keratinocytes and fibroblasts, and cutaneous wound healing. Hence, 11β-HSD1 might maintain skin homeostasis by regulating the proliferation of keratinocytes and dermal fibroblasts. Thus 11β-HSD1 is a novel candidate target for the design of skin disease treatments.