Epidermal growth factor (EGF) family members, including epiregulin (EP), play a fundamental role in epithelial tissues; however, their roles in immune responses and the physiological role of EP remain to be elucidated. The skin has a versatile system of immune surveillance. Biologically active IL-1alpha is released to extracellular space upon damage from keratinocytes and is a major player in skin inflammation. Here, we show that EP is expressed not only in keratinocytes but also in tissue-resident macrophages, and that EP-deficient (EP(-/-)) mice develop chronic dermatitis. Wound healing in the skin in EP(-/-) mice was not impaired in vivo, nor was the growth rate of keratinocytes from EP(-/-) mice different from that of WT mice in vitro. Of interest is that in WT keratinocytes, both IL-1alpha and the secreted form of EP induced down-regulation of IL-18 mRNA expression, which overexpression in the epidermis was reported to induce skin inflammation in mice, whereas the down-regulation of IL-18 induced by IL-1alpha was impaired in EP(-/-) keratinocytes. Although bone marrow transfer experiments indicated that EP deficiency in non-bone-marrow-derived cells is essential for the development of dermatitis, production of proinflammatory cytokines by EP(-/-) macrophages in response to Toll-like receptor agonists was much lower, compared with WT macrophages, whose dysfunction in EP(-/-) macrophages was not compensated by the addition of the secreted form of EP. These findings, taken together, suggested that EP plays a critical role in immune/inflammatory-related responses of keratinocytes and macrophages at the barrier from the outside milieu and that the secreted and membrane-bound forms of EP have distinct functions.