Psoriasis is a chronic inflammatory skin disease characterised by elevated red scaly plaques on specific body sites. Histologically, the plaques are defined by epidermal hyperplasia, epidermal and dermal infiltration by leukocytes, and changes in the dermal microvasculature. Differentiation and activation are disturbed in lesional psoriatic keratinocytes, and the pool of proliferating keratinocytes is increased, which is accompanied by enhanced production of proinflammatory cytokines, adhesion molecules and antimicrobial peptides. These changes in psoriatic keratinocytes are caused by altered expression of genes associated with epidermal differentiation, and by activation of signalling pathways involving signal transducer and activator of transcription 3 (STAT3), type I interferon (IFN) and mitogen-activated protein kinase (MAPK). The number of T cells, and myeloid and plasmacytoid dendritic cells (DCs) is markedly increased in psoriatic lesions. Myeloid DCs produce interleukin (IL)-23, tumour necrosis factor (TNF)-α and inducible nitric oxide synthase (iNOS), which are crucial cytokines in the pathogenesis of psoriasis. IL-23 stimulates the secretion of IL-22 by T helper 17 cells, and IL-22 induces epidermal hyperplasia. The crosstalk between keratinocytes and leukocytes via their proinflammatory cytokines creates the vicious circle of chronic skin inflammation seen in psoriasis. This suggests that optimal treatment of psoriasis needs to target pathogenic pathways in both leukocytes and keratinocytes.