Keratinocytes are the major cell type in the human epidermis, the outer layer of skin. These cells undergo a tightly regulated terminal differentiation program which results in the formation of the cornified envelope. This envelope is essentially the barrier which protects us from mechanical stress, extreme climate conditions and infectious agents. A fully functional epidermal barrier dictates a perfect balance between proliferation and differentiation. PKCδ, a novel PKC isoform and a key controller of epidermal differentiation regulates proliferation by increasing p21Cip1 expression. However, little is known about the mediators involved in this regulation. We hypothesize that p38δ MAPK, a downstream kinase is a mediator in this process. We observe that p38δ regulates p21Cip1 mRNA/protein levels in a p53 dependent manner. Additionally, PKCδ selectively activates p38δ and treatment with p38δ-siRNA or dominant negative p38 results in attenuation of the PKCδ induced p21Cip1 response. Furthermore, p53 is identified as a novel target of p38δ and is a key mediator in the p38δ -p21Cip1 signaling cascade. Moreover, the physiological relevance of this pathway is confirmed in the PKCδ and p38δ knockdown organotypic cultures which are thicker, have additional layers and reduced cornified envelope formation as compared to the controls. We have also identified the Protein Arginine Methyltransferase (PRMT5) and Methylosome Protein 50 (MEP50) as novel targets of PKCδ and p38δ. MEP50 enhances keratinocyte proliferation and opposes differentiation by mechanisms involving silencing p21Cip1 and involucrin. We found that symmetric demethylation of arginines in histones H3 and H4 plays a key role in this regulation. Additionally, the pro-proliferation role of MEP50 is physiologically relevant as MEP50 knockdown rafts are significantly thinner and have fewer number of Ki67 positive cells than the control rafts. These studies highlight p38δ as a common kinase regulating the dual processes of proliferation and differentiation and characterize the role of MEP50/PRMT5 as novel players in controlling epidermal homeostasis.