Lipids in the stratum corneum (SC) are organized into lamellar membrane unit structures that provide the permeability barrier. Cholesterol sulfate, a SC membrane lipid, is synthesized by cholesterol sulfotransferase (CSTase) in the lower epidermis and hydrolyzed to cholesterol by steroid sulfatase (SSase) in the SC. To determine whether these enzymes are induced during barrier ontogenesis, we examined their activity in epidermis of fetal rats before (gestational day 17), during (day 19), and after (day 21) barrier formation. CSTase activity increased approximately 10-fold between day 17 and day 19, then declined between day 19 and day 21. In contrast, SSase activity reached its peak activity on day 21, increasing >5-fold. Fetal rat skin explants develop a SC and barrier over the same time course in vitro as in utero. Likewise, CSTase and SSase activities during in vitro ontogenesis precisely mirrored those obtained in utero. Moreover, hormones that accelerate barrier ontogenesis (e.g. glucocorticoids, thyroid hormone, and estrogen) accelerated the increase in CSTase and SSase activities during in vitro ontogenesis. mRNA levels of SSase increased in parallel with enzymatic activity, suggesting that these developmental changes are regulated at the genomic level. Finally, addition of exogenous cholesterol sulfate to explants in vitro did not accelerate either SC development or barrier formation. These studies suggest that induction of the cholesterol sulfate cycle enzymes during SC ontogenesis is a component of the fetal epidermal differentiation program and that the synthetic and degradative enzymes of this pathway are differentially regulated.