Thapsigargin (Tg), applied twice weekly to the backs of CD-1 mice initiated with 7,12-dimethylbenz[a]anthracene, promoted papillomas on the skin of approximately 50% of the mice. Tg alone induced papillomas in 10% of the mice. Although Tg and 12-O-tetradecanoylphorbol-13-acetate (TPA) are synergistic in a keratinocyte co-culture assay for promotion, skin tumor promotion by TPA was inhibited by co-treatment with Tg. Treatment of cultured keratinocytes with non-toxic doses of Tg increased the level of intracellular free Ca(2+)-induced stratification. Tg blocked expression of the spinous layer differentiation marker keratin 1 (K1), while inducing cornification, a marker of differentiation in the granular layer/stratum corneum. In medium with 1.4 mM Ca2+, Tg prolonged keratinocyte proliferation and selected foci of monolayer cells. A Tg-independent cell line, TK-1, was developed from a single dish in which foci continued to expand after Tg removal. Grafting TK-1 cells on to the backs of nude mice as part of a reconstituted skin resulted in the development of dysplastic papillomas with a high rate of progression to squamous cell carcinomas.