Sphingosine 1-phosphate (S1P) is a product of membrane sphingolipid metabolism. S1P is secreted and acts via G-protein-coupled receptors, S1PR1-5, and is involved in diverse cellular functions, including cell proliferation, immune suppression, and cardiovascular functions. Recent studies have shown that the effects of S1P signaling are extended further by coupling the different S1P receptors and their respective downstream signaling pathways. Our group has recently reported that S1P inhibits cell proliferation and induces differentiation in human keratinocytes. There is a growing understanding of the connection between S1P signaling, skin barrier function, and skin diseases. For example, the activation of S1PR1 and S1PR2 during bacterial invasion regulates the synthesis of inflammatory cytokines in human keratinocytes. Moreover, S1P-S1PR2 signaling is involved in the production of inflammatory cytokines and can be triggered by epidermal mechanical stress and bacterial invasion. This review highlights how S1P affects human keratinocyte proliferation, differentiation, immunoreaction, and mast cell immune response, in addition to its effects on the skin barrier interface. Finally, studies targeting S1P-S1PR signaling involved in inflammatory skin diseases are also presented.