Lymphoepithelial Kazal-type related inhibitor (LEKTI) is a multidomain serine protease inhibitor which plays a central role in skin permeability barrier and allergy. Loss-of-function mutations in the LEKTI encoding gene SPINK5 cause Netherton syndrome, a rare and severe genetic skin disease with a profound skin barrier defect and atopic manifestations. Several studies also reported genetic association between the multifactorial disease atopic dermatitis (AD) and a frequent and non-conservative LEKTI variant, E420K, in different populations. Here, we provide evidence that the 420K variant impacts on LEKTI function by increasing the likelihood of furin-dependent LEKTI precursor cleavage within the linker region D6-D7. This results in the reversal of the cleavage priorities for LEKTI proteolytic activation and prevents the formation of the LEKTI fragment D6D9 known to display the strongest inhibitory activity against kallikrein (KLK) 5-mediated desmoglein-1 (DSG1) degradation. Using in situ and gel zymographies, we show that the modification of the subtle balance in LEKTI inhibitory fragments leads to enhanced KLK5, KLK7 and elastase-2 (ELA-2) activities in 420KK epidermis. By immunohistochemistry and western blot analyses, we found that increased epidermal protease activity correlates with reduced DSG1 protein expression and accelerated profilaggrin proteolysis. All changes determined by the presence of residue 420K within the LEKTI sequence likely contribute to defective skin barrier permeability. Remarkably, LEKTI 420KK epidermis displays an increased expression of the proallergic cytokine thymic stromal lymphopoietin (TSLP). This is the first functional evidence supporting association studies which identified the 420K LEKTI variant as a predisposing factor to AD, in combination with other genetic and environmental factors.