Psoriatic skin is characterized by microvascular hyperpermeability and angioproliferation, but the mechanisms responsible are unknown. We report here that the hyperplastic epidermis of psoriatic skin expresses strikingly increased amounts of vascular permeability factor (VPF; vascular endothelial growth factor), a selective endothelial cell mitogen that enhances microvascular permeability. Moreover, two VPF receptors, kdr and flt-1, are overexpressed by papillary dermal microvascular endothelial cells. Transforming growth factor alpha (TGF-alpha), a cytokine that is also overexpressed in psoriatic epidermis, induced VPF gene expression by cultured epidermal keratinocytes. VPF secreted by TGF-alpha-stimulated keratinocytes was bioactive, as demonstrated by its mitogenic effect on dermal microvascular endothelial cells in vitro. Together, these findings suggest that TGF-alpha regulates VPF expression in psoriasis by an autocrine mechanism, leading to vascular hyperpermeability and angiogenesis. Similar mechanisms may operate in tumors and in healing skin wounds which also commonly express both VPF and TGF-alpha.