Gain-of-function mutations in the TRPV3 gene can cause Olmsted syndrome characterized by palmoplantar and periorificial keratoderma, itch, and hair loss. The mechanism underlying hair loss remains unclear. Here, we engineered an Olmsted syndrome mouse model by introducing the point mutation G568V to the corresponding Trpv3 locus in mice. These mice developed fully penetrant hair loss. The hair loss was associated with premature differentiation of follicular keratinocytes characterized by precocious degeneration of trichohyalin and keratins, increased production of deiminated proteins, elevated apoptosis, and attenuation of transcription regulators (Foxn1, Msx2, Dlx3, and Gata3) known to regulate hair follicle differentiation. These abnormalities occurred in the medial-proximal region of the inner root sheath and the hair shaft, where Trpv3 is highly expressed, and correlated with impaired formation of the hair canal and the hair shaft. The mutant Trpv3 mice also exhibited increased proliferation in the outer root sheath, accelerated hair cycle, reduction of hair follicle stem cells, and miniaturization of regenerated hair follicles. Findings from this study suggest that precocious maturation of postmitotic follicular keratinocytes drives hair loss in Olmsted syndrome patients.