Ligand activation of the aryl hydrocarbon receptor (AHR) accelerates keratinocyte differentiation and the formation of the epidermal permeability barrier. Several classes of lipids, including ceramides, are critical to the epidermal permeability barrier. In normal human epidermal keratinocytes, the AHR ligand, 2,3,7,8-tetrachlorodibenzo-p-dioxin, increased RNA levels of ceramide metabolism and transport genes: uridine diphosphate glucose ceramide glucosyltransferase (UGCG), ABCA12, GBA1, and SMPD1. Levels of abundant skin ceramides were also increased by 2,3,7,8-tetrachlorodibenzo-p-dioxin. These included the metabolites synthesized by UGCG, glucosylceramides, and acyl glucosylceramides. Chromatin immunoprecipitation-sequence analysis and luciferase reporter assays identified UGCG as a direct AHR target. The AHR antagonist, GNF351, inhibited the 2,3,7,8-tetrachlorodibenzo-p-dioxin−mediated RNA and transcriptional increases. Tapinarof, an AHR ligand approved for the treatment of psoriasis, increased UGCG RNA, protein, and its lipid metabolites hexosylceramides as well as increased the RNA expression of ABCA12, GBA1, and SMPD1. In Ahr-null mice, Ugcg RNA and hexosylceramides were lower than those in the wild type. These results indicate that the AHR regulates the expression of UGCG, a ceramide-metabolizing enzyme required for ceramide trafficking, keratinocyte differentiation, and epidermal permeability barrier formation.