SKALP/Elafin is a proteinase inhibitor found in psoriatic epidermis as a short polypeptide of 6 kDa. Here we present evidence that this protein is synthesized as a larger precursor molecule with distinct biological features. Purification and NH2-terminal sequencing of SKALP/elafin from cultured human keratinocytes and the cloning of its cDNA revealed the existence of a mature protein, which upon cleavage of a hydrophobic signal sequence of 22 amino acids has a calculated molecular mass of 9.9 kDa (95 amino acids). In addition to the known proteinase inhibitor domain, the mature protein contains a domain with 4 repeats which are homologous to putative transglutaminase substrate motifs. We were able to demonstrate on Western blots that immunoreactive SKALP is present in high molecular weight proteins extracted from psoriatic skin. This suggests that SKALP is covalently attached to epidermal proteins. In addition it was found that both the complete SKALP molecule and a synthetic peptide of the NH2-terminal portion of SKALP could be used as a transglutaminase substrate. We therefore speculate that SKALP/elafin, secreted by epidermal keratinocytes in inflamed skin, exists both as a free 6-kDa form and as an immobilized 9.9-kDa form covalently attached to the cornified envelopes by transglutaminase cross-linking.