The two cyclic nucleotides, cyclic AMP and cyclic GMP, appear to be central to the metabolic regulation of cell proliferation and differentiation in various cells. Moreover, in many systems glucocorticoids appear to act in concert with or parallel to cyclic AMP. The available evidence suggests that these three molecular species--cyclic AMP, cyclic GMP, and glucocorticoids--may be essential to the normal regulation of epidermal proliferation and differentiation. In 1970, we suggested that perturbed epidermal homeostasis, exemplified by psoriasis, might be associated with low cellular levels of cyclic AMP and, in 1972, with high levels of cyclic GMP as well. Subsequent measurements of these two cyclic nucleotides in our laboratory showed a probable reduction in the cyclic AMP/cyclic GMP ratio in lesional psoriatic tissue. This led to the hypothesis that the cardinal features of psoriatic epidermis--glycogen accumulation, excessive proliferation, and reduced cell specialization--are the results of this reduced ratio. A corollary of this hypothesis was that a psoriatic lesion could not begin or exist without this altered cyclic nucleotide ratio. Recently, four different agents--lithium, a beta adrenergic blocking agent, antimalarials, and iodide--have been found to exacerbate psoriasis and to reduce the formation of cyclic AMP in various tissues. Consequently we believe that cyclic nucleotides are of central importance in the pathogenesis of the epidermal component of psoriasis.