Transglutaminases (TGMs) contribute to the formation of rigid, insoluble macromolecular complexes, which are essential for the epidermis and hair follicles to perform protective and barrier functions against the environment. During differentiation, epidermal keratinocytes undergo structural alterations being transformed into cornified cells, which constitute a highly tough outermost layer of the epidermis, the stratum corneum. Similar processes occur during the hardening of the hair follicle and the hair shaft, which is provided by the enzymatic cross-linking of the structural proteins and keratin intermediate filaments. TGM3, also known as epidermal TGM, is one of the pivotal enzymes responsible for the formation of protein polymers in the epidermis and the hair follicle. Numerous studies have shown that TGM3 is extensively involved in epidermal and hair follicle physiology and pathology. However, the roles of TGM3, its substrates, and its importance for the integument system are not fully understood. Here, we summarize the main advances that have recently been achieved in TGM3 analyses in skin and hair follicle biology and also in understanding the functional role of TGM3 in human tumor pathology as well as the reliability of its prognostic clinical usage as a cancer diagnosis biomarker. This review also focuses on human and murine hair follicle abnormalities connected with TGM3 mutations.