p63/p51, a homolog of the tumor suppressor protein p53, is chiefly expressed in epithelial tissues, including the epidermis. p63 affects cell death similar to p53, and also plays important roles in the development of epithelial tissues and the maintenance of epithelial stem cells. Because it remains unclear how p63 regulates epithelial cell differentiation, we examined the function(s) of p63 in keratinocyte differentiation through the use of a keratinocyte culture system. ⌬Np63␣ (⌬Np51B), a p63 isoform specifically expressed in basal keratinocytes, suppressed the differentiation of specific late-stage proteins, such as filaggrin and loricrin. In contrast, ⌬Np63␣ induced keratin 1 (K1), which is expressed at the start of differentiation, via c-Jun N-terminal kinase (JNK)/AP-1 activation. However, p63 did not induce K1 expression in the basal layer in vivo, although basal keratinocytes had high levels of p63. This discrepancy was explained by the suppression of K1 expression by dermis-secreted keratinocyte growth factor. This suppression occurred via extracellular signal-related kinase (ERK) signaling, and counteracted the p63-mediated induction of K1. Thus, a precise balance between p63 and keratinocyte growth factor mediates the onset of epithelial cell differentiation, through JNK and ERK signaling. These data may provide mechanistic explanations for the pathological features of skin diseases, including psoriasis.p63, also known as p51, is a homologue of the tumor suppressor protein p53. The p53 family of transcription factors consists of three members, p53, p63, and p73 (1). The p63 gene possesses two transcriptional start sites that generate transcripts encoding proteins with (termed TAp63) or without (termed ⌬Np63) an N-terminal transactivation (TA) 3 domain. In addition, alternative splicing primarily results in 3 isoforms, p63␣, p63, and p63␥, each of which is unique at its C terminus. Despite a high similarity in their structures, members of the p53 family seem to play mostly distinct functions in tumor suppression and development. Whereas mutations of p53 are found in more than half of all human cancers, the overexpression of p63, and particularly of the ⌬Np63␣ isoform, has been reported in a variety of squamous cell cancers (2-4). Furthermore, p63 mutations result in various human hereditary diseases involving ectodermal dysplasia, a variety of abnormalities characterized by defects in the skin and its associated structures (5). p63 Ϫ/Ϫ mice also display severe abnormalities of the skin, limbs, and mammary glands (6, 7). This is in contrast to p53 Ϫ/Ϫ mice that develop apparently normal (8). The skin of p63 Ϫ/Ϫ mice has an epidermis that is thin, lacks stratification, and does not express markers of keratinocyte differentiation. These features indicate a critical role for p63 in regulating various facets of epithelial cell biology.The epidermis is organized in several distinct overlying layers designated, from the bottom to the surface, as the basal, spinous, granular, and cornified layers (9, 10). Act...