A newborn baby's skin differs from the skin of older children and adults, both in structure and function. When a baby is just born, he may be covered in a layer of white, creamy substance known as vernix caseosa. This natural substance provides a waterproof layer to protect a baby's skin when he is still in the womb. At birth, it acts as a lubricant and is involved in heat and water regulation. It also protects from bacteria and aids in wound healing during the birth process, until it is gently removed at the first few baths. 

Full term newborns have wrinkled skin and within a month or two, their skin will start peeling. The peeling of skin on your baby's palms and feet will be more prominent. Babies spend their first nine months in amniotic fluid in the womb while the air humidity after birth is about 60%. The skin humidity of newborn conditions from inside the womb to the dry environment outside causes their skins to peel off slowly. It is more noticeable in one or two weeks after birth. After one or two months, your baby's skin will adapt to the new humidity level in the new environment and the skin peeling condition will improve.

For overdue babies (more than 42 weeks of pregnancy), as his or her fetal subcutaneous fat is reduced, his or her skin will be drier and more wrinkled and his or her skin peeling will get more severe after birth.

Treating newborn skin peeling:

• Newborn skin peeling is a normal and will recover naturally over time. Also, you can apply some baby oil/ emollient to your baby's skin to moisturize his or her dry skin.
• Use mild cleansers or soap substitutes without added fragrances or dyes. Strong soaps, especially antiseptic soaps and bubble baths are not recommended for babies.
• The ideal water temperature for bathing a newborn baby is 36-38 degrees Celsius. This is because hot water can rob a baby's skin of its natural protective oils. Bath time should be limited to 5-10 minutes.

Reference: SingHealth, HealthHub, HealthXchange