Netherton syndrome (NS) is a severe genetic skin disease in which absence of a key protease inhibitor causes congenital exfoliative erythroderma, eczematous-like lesions, and atopic manifestations. Several proteases are overactive in NS, including kallikrein-related peptidase (KLK) 5, KLK7, and elastase-2 (ELA2), which are suggested to be part of a proteolytic cascade initiated by KLK5. To address the role of KLK5 in NS, we have generated a new transgenic murine model expressing human KLK5 in the granular layer of the epidermis (Tg-KLK5). Transgene expression resulted in increased proteolytic activity attributable to KLK5 and its downstream targets KLK7, KLK14, and ELA2. Tg-KLK5 mice developed an exfoliative erythroderma with scaling, growth delay, and hair abnormalities. The skin barrier was defective and the stratum corneum was detached through desmosomal cleavage. Importantly, Tg-KLK5 mice displayed cutaneous and systemic hallmarks of severe inflammation and allergy with pruritus. The skin showed enhanced expression of inflammatory cytokines and chemokines, infiltration of immune cells, and markers of Th2/Th17/Th22 T cell responses. Moreover, serum IgE and Tslp levels were elevated. Our study identifies KLK5 as an important contributor to the NS proteolytic cascade and provides a new and viable model for the evaluation of future targeted therapies for NS or related diseases such as atopic dermatitis.