Epidermal hyper-proliferation is a key feature of psoriasis, and a role for IGF-I in this process has previously been proposed. Herein we investigated the expression of IGF binding proteins in the psoriatic lesion and compared it with normal skin. With in situ hybridization, we found that IGFBP-3 mRNA was expressed in the basal layer of the epidermis in normal skin. IGFBP-3 was also detected immunohistochemically, exclusively in the basal layer. In the psoriatic lesion, IGFBP-3 mRNA was similarly limited to the basal layer despite the characteristic expansion of the basaloid keratinocyte compartment and was detected only in the suprapapillary epidermis, where IGFBP-3 mRNA was more abundant than in normal or uninvolved epidermis, and IGFBP-3 protein could be readily detected with specific antibody. As with IGFBP-3 mRNA, which represents the likely site of IGFBP-3 synthesis, IGFBP-3 was strictly limited to the basal keratinocytes of the suprapapillary epidermis. By using an antibody to the cell cycle antigen Ki67, we also showed that the suprapapillary epidermis, where IGFBP-3 expression was maximal, contained few keratinocytes undergoing mitosis, whereas the tips of the rete pegs, where IGFBP-3 expression was conspicuously absent, contained many keratinocytes undergoing mitosis. We suggest that IGFBP-3 is a growth inhibitor in basal keratinocytes and that absence of IGFBP-3 in the tips of rete pegs may contribute to epidermal hyper-proliferation in the psoriatic lesion.