The lipophilic yeast Malassezia furfur is a member of the cutaneous microbiota, also associated with several chronic diseases such as pityriasis versicolor, folliculitis, seborrhoeic dermatitis, and some forms of atopic dermatitis, psoriasis and confluent and reticulate papillomatosis. In this study we determined the immunomodulatory and invasive capacity of M. furfur in a human keratinocyte cell culture, HaCat. At a yeast cell to HaCat ratio of 30:1, M. furfur penetration was only 30% with poor phagolysosome fusion and with cytoskeleton modification. Transglutaminase I gene expression was also inhibited, supporting the hypothesis that M. furfur causes an initial break in the barrier function of the epidermis. Moreover, we demonstrated that M. furfur modulates proinflammatory and immunomodulatory cytokine synthesis by downregulating IL-1alpha and by inhibiting IL-6 and TNF-alpha and by upregulating IL-10 and TGF-beta1. The suppressed inflammatory response induced by M. furfur may play a role in chronic disease.