The TAF4 subunit of transcription factor TFIID was inactivated in the basal keratinocytes of foetal and adult mouse epidermis. Loss of TAF4 in the foetal epidermis results in reduced expression of the genes required for skin barrier function, leading to early neonatal death. By contrast, TAF4 inactivation in adult epidermis leads to extensive fur loss and an aberrant hair cycle characterised by a defective anagen phase. Although the mutant epidermis contains few normal anagen-phase hair follicles, many genes expressed at this stage are strongly upregulated indicating desynchronized and inappropriate gene expression. The TAF4 mutant adult epidermis also displays interfollicular hyperplasia associated with a potent upregulation of several members of the EGF family of mitogens. Moreover, loss of TAF4 leads to malignant transformation of chemically induced papillomas and the appearance of invasive melanocytic tumours. Together, our results show that TAF4 is an important regulator of keratinocyte proliferation and has cell-autonomous and non-cell-autonomous tumour suppressor activity.