Keratinocyte (KC) hyper-proliferation and epidermal thickening are characteristic features of psoriasis lesions, but the specific contributions of KCs to plaque formation are not fully understood. This study used RNA-seq to investigate the transcriptome of primary monolayer KC cultures grown from lesional (PP) and non-lesional (PN) biopsies of psoriasis patients and control subjects (NN). Whole skin biopsies from the same subjects were evaluated concurrently. RNA-seq analysis of whole skin identified a larger number of psoriasis-increased differentially expressed genes (DEGs), but analysis of KC cultures identified more PP- and PN-decreased DEGs. These latter DEG sets overlapped more strongly with genes near loci identified by psoriasis genome-wide association studies and were enriched for genes associated with epidermal differentiation. Consistent with this, the frequency of AP-1 motifs was elevated in regions upstream of PN-KC-decreased DEGs. A subset of these genes belonged to the same co-expression module, mapped to the epidermal differentiation complex, and exhibited differentiation-dependent expression. These findings demonstrate a decreased differentiation gene signature in PP/PN-KCs that had not been identified by pre-genomic studies of patient-derived monolayers. This may reflect intrinsic defects limiting psoriatic KC differentiation capacity, which may contribute to compromised barrier function in normal-appearing uninvolved psoriatic skin.