A minority of collodion babies, called ‘self-healing collodion babies’, heal spontaneously. We describe a novel clinical phenotype of acral self-healing collodion baby caused by a new TGM1 mutation. The proband, born to healthy parents, presented at birth as a collodion baby strictly localized to the extremities. The skin condition returned to normal at the age of 3 weeks. The older sister was born as a generalized collodion baby; the condition then developed into lamellar ichthyosis. Molecular analysis of TGM1 revealed three novel mutations in the family. The proband was compound heterozygous for the p.Val359Met and p.Arg396His mutations, whereas the older sister was compound heterozygous for p.Arg396His and a deletion mutation c.1922_1926+2delGGCCTGT. Structural modelling of the p.Val359Met mutation suggested a minor disruption of the protein structure, whereas a modification of protein–protein interaction was predicted for p.Arg396His. These predictions corroborated the analysis of recombinant transglutaminase (TGase)-1 proteins carrying the p.Val359Met and p.Arg396His mutations. Both showed decreased levels of protein expression: p.Val359Met displayed residual activity (12·8%), while p.Arg396His caused a dramatic loss of activity (3·3%). These observations demonstrate for the first time that TGM1 mutations can be associated with acral self-healing collodion baby, and expand the clinical spectrum of TGase-1 deficiency.