Lipoxygenase (LOX) are non-heme iron dioxygenases that form fatty acid hydroperoxides used in membrane remodeling and cell signaling. Mammalian epidermal LOX type 3 (eLOX3) is distinctive in totally lacking this typical oxygenase activity. Surprisingly, genetic evidence has linked mutations in either eLOX3 or a co-localizing enzyme, 12R-LOX, to an inherited skin disease, non-bullous congenital ichthyosiform erythroderma (NCIE), in which there is a defect in the normal skin permeability barrier (Hum. Mol. Gen. 11, 107-113). Here I identify a logical link of the biochemistry to the genetics. eLOX3 functions as a hydroperoxide isomerase utilizing the product of 12R-LOX, 12R-hydroperoxyeicosatetraenoic acid (12R-HPETE), as the preferred substrate. Using HPLC, GC-MS, NMR and CD spectroscopy, I demonstrated that eLOX3 converts 12R-HPETE to a specific epoxyalcohol, 8R-hydroxy-11R,12R-epoxyeicosa-5Z,9E,14Z-trienoic acid, and 12-ketoeicosatetraenoic acid in a 2:1 ratio. eLOX3 appears to be unique among LOX enzymes in using the ferrous form of the catalytic iron as the active species, initiating reaction by a one electron reduction of the substrate hydroperoxide and completing reaction by rebound hydroxylation to form the epoxyalcohol product. I analyzed the effect of the naturally occurring mutations identified in NCIE on eLOX3 and 12R-LOX catalytic activity; the lipoxygenase activity of 12R-LOX and the hydroperoxide isomerase activity of eLOX3 were totally eliminated. I further demonstrated that the epoxyalcohol formed by human eLOX3 is metabolized by soluble epoxide hydrolase in human keratinocytes to a single trihydroxy isomer, 8R,11S,12R-trihydroxyeicosa-5Z,9E,14Z-trienoic acid. Both the epoxyalcohol and its triol hydrolysis product were then tested for activity in activation of peroxisome proliferator-activated receptors (PPARs). Each selectively caused induction of PPARalpha-dependent transcription with similar activity to 8S-hydroxyeicosatetraenoic acid, a PPARalpha specific agonist. Because human and mouse express a different spectrum of LOX enzymes in skin, I also investigated the substrate selectivity of mouse eLOX3. It uses the product of mouse 8-LOX as its preferred substrate, a coupling consistent with the specific expression of 8-LOX in mouse skin. My results provide strong biochemical evidence for the existence of a novel LOX pathway. Loss of this pathway may contribute to a reduced differentiation in keratinocytes and pathogenesis of NCIE.