Basal cell carcinoma (BCC) is the most common skin tumor in humans. Although BCCs rarely metastasize, they can cause significant morbidity due to local aggressiveness. Approximately 20% of BCCs show signs of spontaneous regression. The understanding of molecular events mediating spontaneous regression has the potential to reduce morbidity of BCC and, potentially, other tumors, if translated into tumor therapies. We show that BCCs induced in conditional Ptch(flox/flox)ERT2(+/-) knockout mice regress with time and show a more differentiated phenotype. Differentiation is accompanied by Wnt5a expression in the tumor stroma, which is first detectable at the fully developed tumor stage. Coculture experiments revealed that Wnt5a is upregulated in tumor-adjacent macrophages by soluble signals derived from BCC cells. In turn, Wnt5a induces the expression of the differentiation marker K10 in tumor cells, which is mediated by Wnt/Ca(2+) signaling in a CaMKII-dependent manner. These data support a role of stromal Wnt5a in BCC differentiation and regression, which may have important implications for development of new treatment strategies for this tumor. Taken together, our results establish BCC as an easily accessible model of tumor regression. The regression of BCC despite sustained Hedgehog signaling activity seems to be mediated by tumor-stromal interactions via Wnt5a signaling.