The plasminogen activator (PA) proteolytic cascade has been implicated in the regulation of cell activities, including proliferation and differentiation, both of which occur continuously in normal human epidermis and are aberrant in psoriatic epidermis. To elucidate further the mechanisms by which PA is regulated in epidermis, we evaluated the levels of PA inhibitors type 1 (PAI-1) and type 2 (PAI-2) in normal and psoriatic epidermis. PAI-2, but not PAI-1, was detectable by mRNA, antigen, and activity assays, indicating that PAI-2 is the predominant epidermal PA inhibitor. In situ hybridization revealed that PAI-2 mRNA occurred throughout normal epidermis, although the signal was most intense in the granular layers. Similarly, PAI-2 antigen was most prominent in the granular layers; its distribution in these differential layers was along the cell periphery. Diffuse, fainter staining for PAI-2 was also detected in the basal cells and in some spinous layers of normal epidermis. Extracts of normal epidermis contained PA inhibitory activity identified as PAI-2 by immunoprecipitation with specific antibody. In psoriatic epidermis, PAI-2 mRNA and antigen were most prominent in the more superficial layers beneath the cornified cells. As with normal epidermis, PAI-2 assumed a pericellular distribution in the psoriatic cells. These data demonstrate that PAI-2 is constitutively expressed in vivo by keratinocytes in human epidermis and indicate that this protein is the predominant inhibitor of PA activity in normal and psoriatic human epidermis.