It is well known that profilaggrin, after its release from keratohyalin granules through dephosphorylation, becomes enzymatically processed into individual filaggrin monomers. The roles for filaggrin monomers in aggregating keratin filaments, as a component of the cornified cell envelope, and as a source of natural moisturizing factor are well established. A specific N-terminal fragment, called the PF-AB domain, becomes proteolytically released as well, but much less is known about its functional role in epidermal development. Here, the functional role of profilaggrin N-terminal (PF-N) domain was addressed by overexpressing three overlapping fragments from a lentiviral expression vector in the epidermis of living skin equivalents. The PF-N domain expression impaired the epidermal development through reducing keratinocyte proliferation and impairing differentiation. The expression of well-known differentiation markers profilaggrin, loricrin, and keratin 10 was considerably downregulated in PF-N domain overexpressing-skin equivalents. The activation of caspase 14 was also substantially affected. In contrast, total silencing of profilaggrin expression, obtained with a lentiviral miR vector, resulted in a hyperproliferative epidermis. We propose a hypothesis that profilaggrin AB domain provides a key feedback mechanism that controls epidermal homeostasis.