Cholesterol sulfate is a highly amphipathic molecule that is present in a relatively high concentration in the epidermis of human skin, particularly in the granular layer. The physiologic significance of this finding, however, is not well-understood. Therefore, we examined expression of the gene encoding for the enzyme that sulfonates cholesterol (SULT2B1b). Of the three enzymes known to sulfonate steroids/sterols, only the SULT2B1b isozyme was detected in cultures of normal human epidermal keratinocytes (NHEK) in response to Ca(2+)-induced terminal differentiation as well as by normal human epidermal tissue. Immunocytochemical analysis of normal skin as well as specific skin disorders was carried out. In normal skin, the expression of SULT2B1b was localized to the granular layer of the epidermis similar to that of filaggrin, an acknowledged late marker of differentiation and in contrast to that of involucrin, an early marker of terminal differentiation, which was expressed throughout the suprabasal region. The confinement of SULT2B1b to the granular layer coincides with this being the area with the highest cholesterol sulfate content suggesting that the physiologic action of cholesterol sulfate is likely carried out in this region of the living epidermis. Additionally, 88% of cholesterol sulfate in NHEK was membrane-associated further suggesting a cellular location for cholesterol sulfate action.