Plasma membrane-bound transglutaminase (TGm) catalyzes the formation of cornified envelopes (CE) in terminally differentiating keratinocytes. The recent cloning of cDNA encoding rabbit TGm allows detailed studies of its gene expression and regulation. In the present paper, we describe the localization of TGm mRNA in rabbit tissues, as well as in normal and psoriatic human skin, as assessed by in situ hybridization. Furthermore, we correlate TGm mRNA localization with the distribution of the TGm protein detected by immunohistochemistry with a specific monoclonal antibody. In rabbit epidermis, TGm mRNA was expressed in suprabasal cells. The TGm protein was detected in the upper stratum spinosum and stratum granulosum. In rabbit esophagus, TGm mRNA and protein were already expressed to a high level in the first suprabasal cell layer, and their expression decreased in the more differentiated cells. In normal human skin, a small amount of TGm mRNA, restricted to the stratum granulosum, was found, whereas psoriatic skin samples contained high amounts of TGm mRNA in the suprabasal layers with a decreasing gradient into the rete ridges, i.e., the involutions of the epidermis into the dermal compartment. The TGm protein was absent from the rete ridges and confined to several cell layers expressing high levels of mRNA. There was virtually no difference between uninvolved psoriatic and normal epidermis.