The introduction of the techniques of molecular biology as tools to study skin carcinogenesis has provided more precise localization of biochemical pathways that regulate the tumor phenotype. This approach has identified genetic changes that are characteristic of each of the specific stages of squamous cancer pathogenesis: initiation, exogenous promotion, premalignant progression, and malignant conversion. Initiation can result from mutations in a single gene, and the Harvey allele of the ras gene family has been identified as a frequent site for initiating mutations. Heterozygous activating mutations in c-ras^Ha are dominant, and affected keratinocytes hyperproliferate and are resistant to signals for terminal differentiation. An important pathway impacted by c-ras^Ha activation is the protein kinase C (PKC) pathway, a major regulator of keratinocyte differentiation. Increased activity of PKCα and suppression of PKCδ by tyrosine phosphorylation contribute to the phenotypic consequences of ras^Ha gene activation in keratinocytes. Tumor promoters disturb epidermal homeostasis and cause selective clonal expansion of initiated cells to produce multiple benign squamous papillomas. Resistance to differentiation and enhanced growth rate of initiated cells impart a growth advantage when the epidermis is exposed to promoters. The frequency of premalignant progression varies among papillomas, and subpopulations at high risk for progression have been identified. These high-risk papillomas overexpress the α6β4 integrin and are deficient in transforming growth factor β1 and β2 peptides, two changes associated with a very high proliferation rate in this subset of tumors. The introduction of an oncogenic ras^Ha gene into epidermal cells derived from transgenic mice with a null mutation in the TGFβ1 gene have an accelerated rate of malignant progression when examined in vivo. Thus members of the TGFβ gene family contribute a tumor-suppressor function in carcinogenesis. Accelerated malignant progression is also found with v-ras^Ha transduced keratinocytes from skin of mice with a null mutation in the p53 gene. The similarities in risk for malignant conversion by initiated keratinocytes from TGFβ and p53 null geneotypes suggest that a common, growth-related pathway may underly the tumor-suppressive functions of these proteins in the skin carcinogenesis model.