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Background: Atopic dermatitis (AD; eczema) is characterized by a widespread abnormality in cutaneous barrier function and propensity to inflammation. Filaggrin is a multifunctional protein and plays a key role in skin barrier formation. Loss-of-function mutations in the gene encoding filaggrin (FLG) are a highly significant risk factor for atopic disease, but the molecular mechanisms leading to dermatitis remain unclear. Objective: We sought to interrogate tissue-specific variations in the expressed genome in the skin of children with AD and to investigate underlying pathomechanisms in atopic skin. Methods: We applied single-molecule direct RNA sequencing to analyze the whole transcriptome using minimal tissue samples. Uninvolved skin biopsy specimens from 26 pediatric patients with AD were compared with site-matched samples from 10 nonatopic teenage control subjects. Cases and control subjects were screened for FLG genotype to stratify the data set. Results: Two thousand four hundred thirty differentially expressed genes (false discovery rate, P <.05) were identified, of which 211 were significantly upregulated and 490 downregulated by greater than 2-fold. Gene ontology terms for "extracellular space" and "defense response" were enriched, whereas "lipid metabolic processes" were downregulated. The subset of FLG wild-type cases showed dysregulation of genes involved with lipid metabolism, whereas filaggrin haploinsufficiency affected global gene expression and was characterized by a type 1 interferon-mediated stress response. Conclusion: These analyses demonstrate the importance of extracellular space and lipid metabolism in atopic skin pathology independent of FLG genotype, whereas an aberrant defense response is seen in subjects with FLG mutations. Genotype stratification of the large data set has facilitated functional interpretation and might guide future therapy development.