Psoriasis is a common T cell-mediated autoimmune disorder where primary onset of skin lesions is followed by chronic relapses. Progress in defining the mechanism for initiation of pathological events has been hampered by the lack of a relevant experimental model in which psoriasis develops spontaneously. We present a new animal model in which skin lesions spontaneously developed when symptomless prepsoriatic human skin was engrafted onto AGR129 mice, deficient in type I and type II interferon receptors and for the recombination activating gene 2. Upon engraftment, resident human T cells in prepsoriatic skin underwent local proliferation. T cell proliferation was crucial for development of a psoriatic phenotype because blocking of T cells led to inhibition of psoriasis development. Tumor necrosis factor-alpha was a key regulator of local T cell proliferation and subsequent disease development. Our observations highlight the importance of resident T cells in the context of lesional tumor necrosis factor-alpha production during development of a psoriatic lesion. These findings underline the importance of resident immune cells in psoriasis and will have implications for new therapeutic strategies for psoriasis and other T cell-mediated diseases.