ADAM17 (a disintegrin and metalloproteinase 17) is ubiquitously expressed and cleaves membrane proteins, such as epidermal growth factor receptor (EGFR) ligands, l-selectin, and TNF, from the cell surface, thus regulating responses to tissue injury and inflammation. However, little is currently known about its role in skin homeostasis. We show that mice lacking ADAM17 in keratinocytes (A17^ΔKC) have a normal epidermal barrier and skin architecture at birth but develop pronounced defects in epidermal barrier integrity soon after birth and develop chronic dermatitis as adults. The dysregulated expression of epidermal differentiation proteins becomes evident 2 d after birth, followed by reduced transglutaminase (TGM) activity, transepidermal water loss, up-regulation of the proinflammatory cytokine IL-36α, and inflammatory immune cell infiltration. Activation of the EGFR was strongly reduced in A17^ΔKC skin, and topical treatment of A17^ΔKC mice with recombinant TGF-α significantly improved TGM activity and decreased skin inflammation. Finally, we show that mice lacking the EGFR in keratinocytes (Egfr^ΔKC) closely resembled A17^ΔKC mice. Collectively, these results identify a previously unappreciated critical role of the ADAM17–EGFR signaling axis in maintaining the homeostasis of the postnatal epidermal barrier and suggest that this pathway could represent a good target for treatment of epidermal barrier defects.