In a series of transgenic mice, the human tissue collagenase gene was expressed in the suprabasal layer of the skin epidermis. Visually, the mice had dry and scaly skin which upon histological analysis revealed acanthosis, hyperkeratosis, and epidermal hyperplasia. At the ultrastructural level, intercellular granular materials were absent in the transgenic skin epidermis but contact was maintained through the intact desmosomes. Despite a diversity of underlying etiologies, similar morphological hyperproliferative changes in the epidermis are observed in the human skin diseases of lamellar ichthyosis, atopic dermatitis, and psoriasis. Subsequent experiments demonstrate that when the transgenic mouse skin was treated once with an initiator (7,12-dimethyl-benz[a]anthracene) and then twice weekly with a promoter (12-O-tetradecanoylphorbol-13-acetate), there was a marked increase in tumor incidence among transgenic mice compared with that among control littermates. These experiments demonstrate that by overexpressing the highly specific proteolytic enzyme collagenase, a cascade of events leading to profound morphological changes which augment the sensitivity of the skin towards carcinogenesis is initiated in the epidermis.