A fundamental goal in cancer biology is to identify the cells and signalling pathways that are keys to induce tumour regression. Here we use a spontaneously self-regressing tumour, cutaneous keratoacanthoma (KAs), to identify physiological mechanisms that drive tumour regression. By using a mouse model system that recapitulates the behaviour of human KAs, we show that self-regressing tumours shift their balance to a differentiation programme during regression. Furthermore, we demonstrate that developmental programs utilized for skin hair follicle regeneration, such as Wnt, are hijacked to sustain tumour growth and that the retinoic acid (RA) signalling pathway promotes tumour regression by inhibiting Wnt signalling. Finally, we find that RA signalling can induce regression of malignant tumours that do not normally spontaneously regress, such as squamous cell carcinomas. These findings provide new insights into the physiological mechanisms of tumour regression and suggest therapeutic strategies to induce tumour regression.