We have characterized an in vitro skin model consisting of neonatal keratinocytes and fibroblasts grown on a nylon mesh. To produce a dermal model, fibroblasts were seeded onto nylon mesh and grown for 4 weeks until a physiologic dermal-like matrix was formed. This matrix was found to consist of collagens I and III, fibronectin, and glycosaminoglycans. Keratinocytes were then seeded onto the dermal model and the co-culture was grown at the air/liquid interface. A differentiated epidermis with distinct basal, spinous, granular, and stratum corneum layers was formed. When incubated in the presence of keratinocytes, fibronectin immunofluorescence increased throughout the dermis compared to cultures incubated similarly in the absence of keratinocytes. A basement membrane zone rich in laminin, collagen IV, and heparan sulfate proteoglycan was detected. The epidermis, isolated from the co-culture by thermolysin digestion, was analyzed for differentiation markers. K1 keratin (67-kDa) and involucrin were detected by immunologic techniques. Ceramide lipids (types III and IV), thought to be important in barrier function, were detected by thin-layer chromatography. The permeability of the co-culture to a panel of compounds, including [3H]-water, was determined using Franz and side-by-side diffusion cells. The permeability coefficient for water was of the same order of magnitude as that determined for neonatal foreskin. The co-culture also showed selective permeability to a panel of compounds of differing lipid solubility. This co-culture metabolized [3H]-testosterone to a profile of metabolites similar to that of neonatal foreskin. We believe that this in vitro skin model will be useful for the study of drug permeability and metabolism