Parakeratosis refers to incomplete maturation of epidermal keratinocytes, resulting in abnormal retention of nuclei in the straum corneum. It occurs in many diseases of the skin, particularty in psoriasis. Down-regulation of Inhibitor of differentiation 4 (ID4) mRNA has been demonstrated in psoriatic skin but the specificity and mechanism for this finding is unknown. In this study, we addressed specificity by immunohistochemical staining for ID4 protein in a spectrum of skin disorders showing parakeratosis, including: psoriasis (n=9), chronic eczema (n=6) and squamous cell carcinoma (SCC) (n=7). In all conditions examined, parakeratotic keratinocytes in the upper layers of the skin lacked ID4 protein expression while keratinocytes in the lower layers were densely stained, in contrast to diffuse expression in normal skin. Since promoter hypermethylation of ID4 has been described in several cancers, we determined the methylation pattern the ID4 promoter in psoriasis, and compared this to skin SCC. We found a novel methylation pattern of the ID4 promoter in both conditions. ID4 promoter methylation was significantly increased in psoriasis (n=9) (34.8%) and SCC (21.84%) (n=7), compared to normal skin (n=6) (0%) (p<0.005 and p<0.05, respectively). Moreover, cells in the upper and lower parts of psoriatic epidermis were, respectively, hypermethylated and unmethylated, at the ID4 promoter. Comparable studies in several cell lines confirmed that hypermethylation of the promoter was associated with loss of ID4 mRNA and protein expression. Our study demonstrates a previously unreported link between gene-specific promoter hypermrthylation and abnormal cellular differentiation in several skin diseases. This mechanism might provide clues for novel therapies for skin disorders characterized by parakeratosis.