In this study we generated human skin equivalents (HSEs) under submerged conditions mimicking the aqueous in utero environment and investigated the morphology and differentiation process of the formed epidermis. Further, the skin barrier, which resides in the stratum corneum (SC), was characterized by its lipid content, hydration level, and natural moisturizing factor level. The submerged HSEs showed comparable tissue morphology and similar expression of several differentiation markers and SC lipid composition compared with HSEs grown at the air-liquid interface and native human skin. The SC of the submerged HSEs, however, contained more free water and less natural moisturizing factors compared with the air-exposed counterparts. These results show that the presented cell culture method can be utilized to generate HSEs under submerged conditions to study epidermal formation under aqueous conditions.