Keratinocytes are skin cells that form in the basal layers of the cell, becoming squamous (flattened) as they rise up toward the skin's surface, and are eventually shed. While we know the life cycle of these cells well, there is still work to be done on exactly how they form keratin, and what factors determine whether a specific basal cell will become a keratinocyte or not.
Keratin is a fibrous protein which is present in the cytoskeleton of many different types of cells; what distinguishes keratinocytes is not only the amount of keratin present in their cytoskeletons, but also the arrangement of the fibers. Currently the leading theory is that the keratin in keratinocytes is arranged in bundles of parallel fibers; this arrangement helps explain how these cells can be both strong and flexible at the same time, and also why they flatten as the amount of keratin increases. As the keratin is created, cell organelles go into stasis, and a fully keratinized cell is dead by the time it reaches the outer layers of the skin.
Keratin is formed by keratinocytes, living cells which make up a large part of skin, hair, nails, and other keratin containing parts of the body. The cells slowly push their way upwards, eventually dying and forming a protective layer of cells. Thousands of these cells are shed every day, and the process can be accelerated by various medical conditions, such as psoriasis. Damage to the external layer of keratin can cause skin, hair, and nails to look unhealthy or flaky.