The epidermal permeability barrier of mammalian skin is localized in the stratum corneum. Corneocytes are embedded in an extracellular, highly ordered lipid matrix of hydrophobic lipids consisting of about 50% ceramides, 25% cholesterol and 15% long and very long chain fatty acids. The most important lipids for the epidermal barrier are ceramides. The scaffold of the lipid matrix is built of acylceramides, containing ω-hydroxylated very long chain fatty acids, acylated at the ω-position with linoleic acid. After glucosylation of the acylceramides at Golgi membranes and secretion, the linoleic acid residues are replaced by glutamate residues originating from proteins exposed on the surface of corneocytes. Removal of their glucosyl residues generates a hydrophobic surface on the corneocytes used as a template for the formation of extracellular lipid layers of the water permeability barrier. Misregulation or defects in the formation of extracellular ceramide structures disturb barrier function. Important anabolic steps are the synthesis of ultra long chain fatty acids, their ω-hydroxylation, and formation of ultra long chain ceramides and glucosylceramides. The main probarrier precursor lipids, glucosylceramides and sphingomyelins, are packed in lamellar bodies together with hydrolytic enzymes such as glucosylceramide-β-glucosidase and acid sphingomyelinase and secreted into the intercelullar space between the stratum corneum and stratum granulosum. Inherited defects in the extracellular hydrolytic processing of the probarrier acylglucosylceramides impair epidermal barrier formation and cause fatal diseases: such as prosaposin deficiency resulting in lack of lysosomal lipid binding and transfer proteins, or the symptomatic clinical picture of the “collodion baby” in the absence of glucocerebrosidase. This article is part of a Special Issue entitled The Important Role of Lipids in the Epidermis and their Role in the Formation and Maintenance of the Cutaneous Barrier. Guest Editors: Kenneth R. Feingold and Peter Elias.