The skin regulates body temperature by perspiration or by using the arrector mucle that holds the hairs on skin. During a hot day, the skin perspires....it gives out water along with sebum and other salts and substances which cools the body. The arrector muscles loosen the hair due to which the hairs are not erect. During a cold day, the arrector muscles forcibly erect the small hairs on the skin which trap the heat of our body and provide insulation. In this way, it regulates temperature.