2-Hydroxylated fatty acid (HFA)-containing sphingolipids are abundant in mammalian skin and are believed to play a role in the formation of the epidermal barrier. Fatty acid 2-hydroxylase (FA2H), required for the synthesis of 2-hydroxylated sphingolipids in various organs, is highly expressed in skin, and previous in vitro studies demonstrated its role in the synthesis of HFA sphingolipids in human keratinocytes. Unexpectedly, however, mice deficient in FA2H did not show significant changes in their epidermal HFA sphingolipids. Expression of FA2H in murine skin was restricted to the sebaceous glands, where it was required for synthesis of 2-hydroxylated glucosylceramide and a fraction of type II wax diesters. Absence of FA2H resulted in hyperproliferation of sebocytes and enlarged sebaceous glands during hair follicle morphogenesis and anagen (active growth phase) in adult mice. This was accompanied by a significant up-regulation of the epidermal growth factor receptor ligand epigen in sebocytes. Loss of FA2H significantly altered the composition and physicochemical properties of sebum, which often blocked the hair canal, apparently causing a delay in the hair fiber exit. Furthermore, mice lacking FA2H displayed a cycling alopecia with hair loss in telogen. These results underline the importance of the sebaceous glands and suggest a role of specific sebaceous gland or sebum lipids, synthesized by FA2H, in the hair follicle homeostasis.