Psoriasis is an incurable autoimmune disease that affects 2–3% of the world’s population. Limited understanding of its pathogenesis hinders the development of therapies for the disease. Herein, we reported that N-acylethanolamine acid amidase (NAAA), a cysteine enzyme that catalyzes the hydrolysis of fatty acid ethanolamides (FAEs), was upregulated in psoriasis patients and imiquimod (IMQ)-induced mouse model of psoriasis. The upregulated NAAA contributes to the progression of psoriasis via enhancing dendritic cell (DCs) maturation. Transgenic expression of NAAA in mice accelerated the development of psoriasis, whereas genetic ablation of NAAA or local administration of NAAA inhibitor F96 ameliorated psoriasis. NAAA expressed in dendritic cells (DCs), but not in macrophages, T cells, or keratinocytes plays a critical role in psoriasis development. In addition, the results showed that NAAA degrades palmitoylethanolamide (PEA) and reduces PEA-PPARα-mediated dissociation of NF-κB p65 from Sirtuin 1 (SIRT1), subsequently, repressing the acetylation of p65 and down-regulating IL10 production. The decreased IL10 then leads to the maturation of DCs, thus promoting the development of psoriasis. These results provide new insights into the pathophysiological mechanism of psoriasis and identify NAAA as a novel target for the treatment of psoriasis.