The epidermis comprises multiple layers of specialized epithelial cells called keratinocytes. As cells are lost from the outermost epidermal layers, they are replaced through terminal differentiation, in which keratinocytes of the basal layer cease proliferating, migrate upwards, and eventually reach the outermost cornified layers. Normal homeostasis of the epidermis requires that the balance between proliferation and differentiation be tightly regulated . The GTP binding protein RhoA plays a fundamental role in the regulation of the actin cytoskeleton and in the adhesion events that are critically important to normal tissue homeostasis . Two central mediators of the signals from RhoA are the ROCK serine/threonine kinases ROCK-I and ROCK-II . We have analyzed ROCK's role in the regulation of epidermal keratinocyte function by using a pharmacological inhibitor and expressing conditionally active or inactive forms of ROCK-II in primary human keratinocytes. We report that blocking ROCK function results in inhibition of keratinocyte terminal differentiation and an increase in cell proliferation. In contrast, activation of ROCK-II in keratinocytes results in cell cycle arrest and an increase in the expression of a number of genes associated with terminal differentiation. Thus, these results indicate that ROCK plays a critical role in regulating the balance between proliferation and differentiation in human keratinocytes.