Aberrant expression of N-cadherin is associated with tumor progression in squamous cell carcinomas (SCCs). Consequently, we examined the regulation of N-cadherin by TGFbeta1, an important mediator of keratinocyte and SCC function. N-cadherin expression was increased in oral SCC (OSCC) cell lines, regulating motility and correlating with TGFbeta1 production. Moreover, in normal keratinocytes TGFbeta1 increased expression of N-cadherin to regulate motility. TGFbeta1-mediated N-cadherin expression in the oral keratinocytes was blocked using siRNA targeting Smads. Unexpectedly, we found that EGF blocked TGFbeta1-mediated N-cadherin expression in oral keratinocytes and not in OSCC cells. Mechanistically, EGF enhanced Smad phosphorylation in the linker region, and attenuated TGFbeta1-mediated phosphorylation of Smad at the C-terminus, localization of Smad to the nucleus as well as Smad-driven promoter activity exclusively in oral keratinocytes but not in OSCC cells. The effect of EGF on TGFbeta1-mediated Smad-driven promoter activity and N-cadherin expression was reversed when activation of ERK1/2 was blocked. Although EGF and TGFbeta1 independently promoted migration of both oral keratinocytes and OSCC cells, EGF decreased TGFbeta1-mediated migration of oral keratinocytes but enhanced migration of OSCC cells. Together, these data support a model wherein EGF signaling has an important negative regulatory role on TGFbeta1-mediated N-cadherin expression and motility in normal oral keratinocytes, and in which loss of this regulatory mechanism accompanies malignant transformation of the oral epithelium.