The most critical function of the epidermis is to prevent water loss and maintain skin homeostasis. Disruption of the functional skin barrier causes delayed wound healing, hypertrophic scarring, and many skin diseases. Herein, we show that reduced hydration increases the expression of S100 protein family members, S100A8/S100A9, in stratified keratinocyte culture and human ex vivo skin culture. Immunohistological analyses show that S100A8/A9 are highly expressed in the epidermis of human hypertrophic scar and keloid tissues. Reduced hydration demonstrates activation of fibroblasts in the keratinocyte-fibroblast co-culture. In contrast, knockdown of S100A8 or S100A9 by RNA interference in keratinocytes failed to activate fibroblasts. Pretreatment with pharmacological blockers of S100A8/A9 receptors, Toll-like receptor 4 and receptor for advanced glycation end products, inhibits fibroblast activation induced by recombinant S100A8/A9 proteins. Moreover, we observe that local delivery of S100A8 protein results in a marked increase in hypertrophic scarring in the in vivo rabbit ear scar model. Our results indicate that hydration status promotes fibroblast activation and fibrosis by directly affecting the expression of inflammatory signaling in keratinocytes, thereby strongly suggesting S100A8/A9 to be novel targets in preventing scarring.