Studies of human genetic disorders and animal models indicate that matriptase plays essential roles in proteolytic processes associated with profilaggrin processing and desquamation at late stages of epidermal differentiation. The tissue distribution profile and zymogen activation status in human skin, however, suggests that matriptase physiological function in the skin more likely lies in the proliferating and differentiating keratinocytes in the basal and spinous layers. Marked acanthosis with expanded spinous layer and lack of significant changes in intensity and expression pattern for several terminal differentiation markers in the skin of ARIH patients support matriptase\'s role in earlier rather than the later stages of differentiation. In addition to the tissue distribution, differential subcellular localization further limits the ability of extracellular matriptase proteolytic activity to access the cytosolic non-membrane-bound keratohyalin granules, in which profilaggrin processing occurs. The short lifespan of active matriptase, which results from tightly controlled zymogen activation, rapid inhibition by HAI-1, and shedding from cell surface, indicates that active matriptase likely performs physiological functions via limited proteolysis on its substrates, as needed, rather than via a continuous bulk process. We, here, review these spatiotemporal controls of matriptase proteolytic activity at the biochemical, cellular, and tissue level. Based on this in-depth understanding of how matriptase activity is regulated, we argue that there is no direct involvement of matriptase proteolytic activity in profilaggrin processing and desquamation. The defects in epidermal terminal differentiation associated with matriptase deficiency are likely secondary and are due to putative disruption at earlier stages of differentiation.