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Background Tofacitinib is an oral Janus kinase inhibitor being investigated for psoriasis. Objective We sought to elucidate the molecular mechanisms underlying the clinical efficacy of tofacitinib in patients with psoriasis. Methods Twelve patients with plaque psoriasis were randomized (3:1) to receive 10 mg of tofacitinib or placebo twice daily for 12 weeks. Biopsy specimens were taken from nonlesional (baseline) and lesional (baseline, days 1 and 3, and weeks 1, 2, 4, and 12) skin. Biopsy specimens were examined for psoriatic epidermal features (thickness, Ki67 + keratinocytes and keratin 16 [KRT16] mRNA expression, and phosphorylated signal transducer and activator of transcription [pSTAT] + nuclei) and T-cell and dendritic cell (DC) subsets by using immunohistochemistry, and mRNA transcripts were quantified by using a microarray. Results In lesional skin keratinocyte pSTAT1 and pSTAT3 staining was increased at baseline but reduced after 1 day of tofacitinib (baseline, median of 1290 pSTAT1 + cells/μm 2 ; day 1, median of 332 pSTAT1 + cells/μm 2 ; and nonlesional, median of 155 pSTAT1 + cells/μm 2 ). Epidermal thickness and KRT16 mRNA expression were significantly and progressively reduced after days 1 and 3 of tofacitinib administration, respectively (eg, KRT16 decreased 2.74-fold, day 3 vs baseline, P = .016). Decreases in DC and T-cell numbers were observed after weeks 1 and 2, respectively. At week 4, significant decreases in IL-23/T H 17 pathways were observed that persisted through week 12. Improvements in clinical and histologic features were strongly associated with changes in expression of psoriasis-related genes and reduction in IL-17 gene expression. Conclusions Tofacitinib has a multitiered response in patients with psoriasis: (1) rapid attenuation of keratinocyte Janus kinase/STAT signaling; (2) removal of keratinocyte-induced cytokine signaling, leading to reductions in pathologic DC and T-cell numbers to nonlesional levels; and (3) inhibition of the IL-23/T H 17 pathway.