Dermal infiltration of T cells is an important step in the onset and progression of immune-mediated skin diseases such as psoriasis; however, it is not known whether epidermal factors play a primary role in the development of these diseases. Here, we determined that the prodifferentiation transcription factor grainyhead-like 3 (GRHL3), which is essential during epidermal development, is dispensable for adult skin homeostasis, but required for barrier repair after adult epidermal injury. Consistent with activation of a GRHL3-regulated repair pathway in psoriasis, we found that GRHL3 is upregulated in lesional skin and binds known epidermal differentiation gene targets. Using an imiquimod-induced model of immune-mediated epidermal hyperplasia, we found that mice lacking GRHL3 have an exacerbated epidermal damage response, greater sensitivity to disease induction, delayed resolution of epidermal lesions, and resistance to anti-IL-22 therapy compared with WT animals. ChIP-Seq and gene expression profiling of murine skin revealed that while GRHL3 regulates differentiation pathways both during development and during repair from immune-mediated damage, it targets distinct sets of genes in the 2 processes. In particular, GRHL3 suppressed a number of alarmin and other proinflammatory genes after immune injury. This study identifies a GRHL3-regulated epidermal barrier repair pathway that suppresses disease initiation and helps resolve existing lesions in immune-mediated epidermal hyperplasia.