Atopic dermatitis (AD) is a multifactorial, heterogenous disease that arises as a result of the interaction between both environmental and genetic factors. Changes in at least three groups of genes encoding structural proteins, epidermal proteases, and protease inhibitors predispose to a defective epidermal barrier and increase the risk of developing AD. Loss-of-function mutations found within the FLG gene encoding the structural protein, filaggrin, represent the most significant genetic factor predisposing to AD identified to date. Enhanced protease activity and decreased synthesis of the lipid lamellae lead to exacerbated breakdown of the epidermal barrier. Environmental factors, including the use of soap and detergents, exacerbate epidermal barrier breakdown, attributed to the elevation of stratum corneum pH. A sustained increase in pH enhances the activity of degradatory proteases and decreases the activity of the lipid synthesis enzymes. The strong association between both genetic barrier defects and environmental insults to the barrier with AD suggests that epidermal barrier dysfunction is a primary event in the development of this disease. Our understanding of gene-environment interactions should lead to a better use of some topical products, avoidance of others, and the increased use and development of products that can repair the skin barrier.