The X-linked histone demethylase, UTX (KDM6A), is a master regulator of gene enhancers, though its role in self-renewing epithelia like the skin is not well-understood. We find that UTX is a key regulator of skin differentiation via the regulation of retinoic acid (RA) signaling, an essential metabolic pathway in both skin homeostasis as well as in the treatment of an array of skin conditions ranging from cancer and acne to aging. Through deletion of Utx in the skin, we demonstrate direct regulation of both retinoid metabolic genes such as Crabp2, as well as key genes involved in epidermal stem cell fate and differentiation (i.e. Cdh1, Grhl3, Ctnnb1). Spatial analyses show that UTX loss dysregulates epidermal, sebaceous, and hair follicle differentiation programs. This occurs only in homozygous females, demonstrating that UTX’s Y-linked paralog, UTY (KDM6C), can compensate in males suggesting the function of UTX in the skin is primarily non-catalytic. Further, we observe genome-wide losses of H3K27ac with minimal H3K27me3 changes, underscoring the idea that UTX functions primarily non-catalytically to promote skin homeostasis. We find that cutaneous loss of UTX results in persistent inflammation that cannot be explained by barrier disruption or infection. However, this inflammatory phenotype is strikingly like that reported for RA signaling loss in the epidermis. Further investigation reveals that buildup of apoptotic debris in catagen hair follicles driven by the loss of RA signaling as a potential mechanism for the observed immune activation. We then demonstrate how persistent inflammation can contribute to disease risk as Utx-cKO female mice are more susceptible to imiquimod induced psoriasis compared to wildtype (WT) females. Further, as several skin diseases and disorders present with a stark sex bias, investigation into this X-linked epigenetic modifier also confers potential relevance to sex disparities in cutaneous disease. Together, the elucidation of these links between epigenetics, metabolic signaling, immunology, and epithelial differentiation offers new insights into how epigenetic modulation may allow for fine-tuning of key signaling pathways to treat disease, potentially in a sex-biased manner.