Air pollution has been linked to many health issues, including skin conditions, especially in children. Among all the atmospheric pollutants, ultrafine particles have been deemed very dangerous since they can readily penetrate the lungs and skin, and be absorbed into the bloodstream. Here, we employed a human embryonic stem cell (hESC)-based differentiation system towards keratinocytes, to test the effects of ultrafine carbon particles, which mimic ambient ultrafine particles, at environment related concentrations. We found that 10 ng/mL to 10 μg/mL ultrafine carbon particles down-regulated the expression of the pluripotency marker SOX2 in hESCs. Moreover, 1 μg/mL to 10 μg/mL carbon particle treatments disrupted the keratinocyte differentiation, and up-regulated inflammation- and psoriasis-related genes, such as IL-1β, IL-6, CXCL1, CXCL2, CXCL3, CCL20, CXCL8, and S100A7 and S100A9, respectively. Overall, our results provide a new insight into the potential developmental toxicity of atmospheric ultrafine particles.