The type II transmembrane serine protease Matriptase 1 (ST14) is commonly known as an oncogene, yet it also plays an understudied role in suppressing carcinogenesis. This double face is evident in the embryonic epidermis of zebrafish loss-of-function mutants in the cognate Matriptase inhibitor Hai1a (Spint1a). Mutant embryos display epidermal hyperplasia, but also apical cell extrusions, during which extruding outer keratinocytes carry out an entosis-like engulfment and entrainment of underlying basal cells, constituting a tumor-suppressive effect. These counteracting Matriptase effects depend on EGFR and the newly identified mediator phospholipase D (PLD), which promotes both mTORC1-dependent cell proliferation and sphingosine-1-phosphate (S1P)–dependent entosis and apical cell extrusion. Accordingly, hypomorphic hai1a mutants heal spontaneously, while otherwise lethal hai1a amorphs are efficiently rescued upon cotreatment with PLD inhibitors and S1P. Together, our data elucidate the mechanisms underlying the double face of Matriptase function in vivo and reveal the potential use of combinatorial carcinoma treatments when such double-face mechanisms are involved.