In cell culture studies, overexpression of the E2F1 transcription factor has been shown to stimulate proliferation, induce apoptosis, and cooperate with an activated ras gene to oncogenically transform primary rodent cells. To study the effect of increased E2F1 activity on epithelial growth and tumorigenesis in vivo, transgenic mice expressing E2F1 under the control of a keratin 5 (K5) promoter were generated. Expression of E2F1 in the epidermis results in hyperplasia but does not inhibit terminal differentiation. In a transgenic line expressing high levels of E2F1, mice have decreased hair growth likely as a result of aberrant apoptosis in developing hair follicles. Coexpression of a cyclin D1 transgene with E2F1 augments epidermal hyperplasia and further disrupts hair follicle development suggesting that hypophosphorylated Rb antagonizes the proliferative and apoptotic-promoting activities of E2F1. Finally, the E2F1 transgene is found to cooperate with a v-Ha-ras transgene to induce skin tumors in double transgenic animals. These findings confirm that many of the activities ascribed to E2F1 through in vitro studies can be reproduced in vivo and demonstrate for the first time that deregulated E2F activity can contribute to tumor development.