Stromal cells at epithelial surfaces contribute to innate immunity by sensing environmental danger signals and producing proinflammatory cytokines. However, the role of stromal cells in controlling local inflammation is unknown. We show that endogenous soluble IL-15 receptor α (IL-15Rα) derived from epidermal stroma, notably keratinocytes, protects against dendritic cell/IL-15-mediated, T cell-driven skin inflammation in vivo, and is relevant to human psoriasis. Selective lack of IL-15Rα on stromal epidermal cells exacerbated psoriasiform inflammation in animals. Epidermal IL-15Rα was shed by keratinocytes via proteolytic cleavage by matrix metalloproteinases upon stimulation with proinflammatory cytokines to counteract IL-15-induced proliferation of IL-17(+) αβ and γδ T cells and production of TNF, IL-23, IL-17, and IL-22 during skin inflammation. Notably, administration of soluble IL-15Rα was able to repress secretion of IL-1β, IL-6, and TNF by keratinocytes, dampen expansion of IL-17(+) αβ and γδ T cells in vivo, and prevent psoriasis in two mouse models, including human xenograft AGR mice. Serum levels of soluble IL-15Rα negatively correlated with disease severity, and levels rose upon successful treatment of psoriasis in patients. Thus, stressed epidermal stromal cells use soluble IL-15Rα to dampen chronic inflammatory skin disease.