Human skin equivalents (HSEs) are three-dimensional cell models mimicking characteristics of native human skin (NHS) in many aspects. However, a limitation of HSEs is the altered
in vitro
morphogenesis and barrier formation. Differences between
in vitro
and
in vivo
skin could have been induced by suboptimal cell culture conditions, of which the level of oxygen
in vitro
(20%) is much higher than
in vivo
(0.5–8%). Our aim is to study how external oxygen levels affect epidermal morphogenesis and barrier formation in HSEs. In the present study, fibroblast and keratinocyte monocultures, and HSEs were generated under 20% (normoxia) and 3% (hypoxia) oxygen level. In all cultures under hypoxia, expression of hypoxia-inducible factor target genes was increased. Characterization of HSEs generated under hypoxia using immunohistochemical analyses of morphogenesis biomarkers revealed a reduction in epidermal thickness, reduced proliferation, similar early differentiation, and an attenuated terminal differentiation program compared to normoxia, better mimicking NHS. The stratum corneum ceramide composition was studied with liquid chromatography coupled to mass spectrometry. Under hypoxia, HSEs exhibited a ceramide composition that more closely resembles that of NHS. Consequently, the lipid organization was improved. In conclusion, epidermal morphogenesis and barrier formation in HSEs reconstructed under hypoxia better mimics that of NHS.