Paclitaxel is a microtubule-stabilizing chemotherapeutic agent that is widely used in cancer treatment and in a number of curative and palliative regimens. Despite its beneficial effects on cancer, paclitaxel also damages healthy tissues, most prominently the peripheral sensory nervous system. The mechanisms leading to paclitaxel-induced peripheral neuropathy remain elusive and therapies that prevent or alleviate this condition are not available. We established a zebrafish in vivo model to study the underlying mechanisms and to identify pharmacological agents that may be developed into therapeutics. Both adult and larval zebrafish displayed signs of paclitaxel neurotoxicity, including sensory axon degeneration and the loss of touch response in the distal caudal fin. Our studies in zebrafish larvae further showed that paclitaxel promotes epithelial damage and decreased mechanical stress resistance of the skin prior to induction of axon degeneration. Epithelial damage correlates with rapid accumulation of fluorescein-conjugated paclitaxel in epidermal basal keratinocytes, but not axons, and upregulation of the collagenase matrix-metalloproteinase 13 (MMP-13, collagenase 3) in basal keratinocytes. Intriguingly, pharmacological inhibition of MMP-13 largely rescued paclitaxel-induced epithelial damage and neurotoxicity. Thus our studies provide evidence that the epidermis plays a critical role paclitaxel neurotoxicty, and we provide a new candidate for therapeutic interventions.