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While ubiquitin-specific peptidase 16 (USP16) has been implicated in modulating multiple cellular signaling pathways, its functional role in psoriatic pathogenesis remains poorly understood. Our investigation revealed pronounced upregulation of USP16 expression in psoriatic epidermis compared with normal controls. Keratinocyte-specific USP16 knockdown demonstrated remarkable therapeutic efficacy, significantly ameliorating characteristic psoriatic phenotypes including epidermal hyperplasia and inflammatory infiltration. RNA-seq analysis showed that USP16 has substantial effects on cell cycle transition and keratinocytes proliferation. Through KEGG analysis, it was found that USP16 primarily regulates the NLRP3 signaling pathway, leading to enhanced cell proliferation and inflammation. Mechanically, USP16 directly binds to the NLRP3 protein to eliminate K48 ubiquitination modification, enhancing the stability of the NLRP3 protein, activating inflammasome activity. 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