The epidermis is a stratified epithelium, which forms a barrier to maintain the internal milieu in metazoans. Being the outermost tissue, growth of the epidermis has to be strictly coordinated with the growth of the embryo. The key parameters that determine tissue growth are cell number and cell size. So far, it has remained unclear how the size of epidermal cells is maintained and whether it contributes towards epidermal homeostasis. We have used genetic analysis in combination with cellular imaging to show that zebrafish goosepimples/myosin Vb regulates plasma membrane homeostasis and is involved in maintenance of cell size in the periderm, the outermost epidermal layer. The decrease in peridermal cell size in Myosin Vb deficient embryos is compensated by an increase in cell number whereas decrease in cell number results in the expansion of peridermal cells, which requires myosin Vb (myoVb) function. Inhibition of cell proliferation as well as cell size expansion results in increased lethality in larval stages suggesting that this two-way compensatory mechanism is essential for growing larvae. Our analyses unravel the importance of Myosin Vb dependent cell size regulation in epidermal homeostasis and demonstrate that the epidermis has the ability to maintain a dynamic balance between cell size and cell number.