BACKGROUND: Fibroblast growth factors (FGFs) are promising agents with which to treat problems of skin and hair. But their inability to penetrate into the skin due to their large size and hydrophilic nature prevents their topical application as effective cosmetic ingredients. AIMS: To identify small peptide(s) with FGF-like activity and epidermis permeability. METHODS: Several peptides deduced from our earlier studies were tested for their ability to promote keratinocyte growth and to activate FGF receptors (FGFRs). Permeability was assessed using HPLC after derivatization. RESULTS: A dipeptide, prolyl-isoleucine (Pro-Ile), not only stimulated growth of human keratinocytes, it also moderately activated FGFR3c and FGFR4, and activated FGFR1c to a lesser extent. This receptor specificity of Pro-Ile is similar to that of FGF18. The activity of Pro-Ile toward FGFR/BaF3 cells was enhanced by heparin and was inhibited by an FGFR inhibitor, PD173074. Pro-Ile enhanced the activity of 5 ng/mL FGF18, but suppressed the activity of 50 ng/mL FGF18 toward FGFR3c and FGFR4. Pro-Ile was found to permeate through validated model human epidermis. CONCLUSIONS: These results indicate that the dipeptide Pro-Ile acts as a partial agonist/antagonist for FGFR signaling, that it has receptor specificity similar to FGF18, and that it is able to penetrate into the model epidermis. Because FGFs expressed in the cutaneous system are physiological regulators, these results suggest the potential utility of this peptide as a topically applicable cosmetic ingredient for the regulation of skin physiology, hair growth, and wound healing.