Mutations in patatin-like phospholipase domain-containing 1 (PNPLA1) cause autosomal recessive congenital ichthyosis, but the mechanism involved remains unclear. Here we show that PNPLA1, an enzyme expressed in differentiated keratinocytes, plays a crucial role in the biosynthesis of ω-O-acylceramide, a lipid component essential for skin barrier. Global or keratinocyte-specific Pnpla1-deficient neonates die due to epidermal permeability barrier defects with severe transepidermal water loss, decreased intercellular lipid lamellae in the stratum corneum, and aberrant keratinocyte differentiation. In Pnpla1−/− epidermis, unique linoleate-containing lipids including acylceramides, acylglucosylceramides and (O-acyl)-ω-hydroxy fatty acids are almost absent with reciprocal increases in their putative precursors, indicating that PNPLA1 catalyses the ω-O-esterification with linoleic acid to form acylceramides. Moreover, acylceramide supplementation partially rescues the altered differentiation of Pnpla1−/− keratinocytes. Our findings provide valuable insight into the skin barrier formation and ichthyosis development, and may contribute to novel therapeutic strategies for treatment of epidermal barrier defects.