Skin is a target of allergic reactions to aromatic amine hair dye precursors, such as p-phenylenediamine (PPD). As conversion of PPD on or in the skin is expected to be required for the induction of allergic contact dermatitis, we analyzed the role of oxidation and N-acetylation as major transformation steps. PPD and its oxidative and N-acetylated derivatives were tested for their sensitizing potential in vitro using a dendritic cell (DC) activation assay and in vivo using the local lymph node assay (LLNA). PPD did not induce relevant DC activation but induced a positive LLNA response. In contrast, DC activation was obtained when PPD was chemically pre-oxidized or after air oxygen exposure. Under both conditions, the potent sensitizing PPD oxidation product Bandrowski's base was identified along with other di- and trimeric species, indicating that PPD oxidation products provide an effective immune stimulation (danger signal). In contrast mono- and diacetylated PPD did not induce DC activation or a positive LLNA response. We conclude that dermal N-acetylation of PPD competes with the formation of oxidized PPD whereas skin exposure conditions allowing auto-oxidation, as in the LLNA, provide an effective danger signal necessary to induce skin sensitization to PPD.