Keratinocytes from three different layers of epidermis (stratum basale, stratum spinosum, and stratum granulosum/corneum) were shown by high-performance liquid chromatography to contain retinol, 3,4-didehydroretinol and several fatty acyl esters thereof. The concentration of unesterified congeners increased 1.8-2.8 times from the inner to the outer layers of epidermis, while the corresponding increase in fatty acyl esters was 4.0-6.5 times. Together the esters represented 71% of the total vitamin A content in stratum granulosum/corneum as compared to 54% in stratum basale. The in situ synthesis of fatty acyl esters of retinol and 3,4-didehydroretinol (vitamin A2) was studied by addition of [3H]retinol to organ-cultured human breast skin. The radioactive compounds appearing in the epidermis after 48 h were, in order of abundance, retinyl esters, retinol, 3,4-didehydroretinyl esters, and 3,4-didehydroretinol. Studies at the subcellular level demonstrated the highest esterifying activity in the microsomal fraction. The enzyme catalyzing the reaction, acyl CoA:retinol acyltransferase (ARAT; EC 2.3.1.76), had a pH optimum of 5.5-6.0, which differs from that of ARAT in other tissues. ARAT activities in microsomes from different layers of epidermis were similar, but, owing to a presumed pH gradient in upper epidermis, the in vivo esterification of vitamin A may be enhanced in terminally differentiating keratinocytes. The mean ARAT activities in basal cell carcinomas and squamous cell carcinomas were less than 50% of the control values, and the relative amounts of retinyl esters were significantly lower than normal. We suggest that the esterification of vitamin A may also be of importance in relation to pathologic keratinocyte differentiation.