Bathing in the Blue Lagoon, a specific geothermal biotope in Iceland has been known for many years to be beneficial for human skin in general and for patients with psoriasis and atopic dermatitis in particular. The scientific rationale for this empirical observation, however has remained elusive. We now report that extracts prepared from silica mud and two different microalgae species derived from the Blue Lagoon are capable of inducing involucrin, loricrin, transglutaminase-1 and filaggrin gene expression in primary human epidermal keratinocytes. The same extracts also affects primary human dermal fibroblasts, because extracts from silica mud and one type of algae inhibited UVA radiation-induced upregulation of matrix metalloproteinase-1 expression and both algae, as well as silica mud extracts induced collagen 1A1 and 1A2 gene expression in this cell type. These effects were not restricted to the in vitro situation because topical treatment of healthy human skin (n = 20) with a galenic formulation containing all three extracts induced identical gene regulatory effects in vivo, which were associated with a significant reduction of transepidermal water loss. In aggregate, these results suggest that the bioactives in Blue Lagoon have the capacity to improve skin barrier function and to prevent premature skin ageing. These observations explain at least some of the beneficial effects of bathing in the Blue Lagoon and provide a scientific basis for the use of Blue Lagoon extracts in cosmetic and/or medical products.