To investigate the function of c-Jun during skin development and skin tumor formation, we conditionally inactivated c-jun in the epidermis. Mice lacking c-jun in keratinocytes (c-jun^Δep) develop normal skin but express reduced levels of EGFR in the eyelids, leading to open eyes at birth, as observed in EGFR null mice. Primary keratinocytes from c-jun^Δep mice proliferate poorly, show increased differentiation, and form prominent cortical actin bundles, most likely because of decreased expression of EGFR and its ligand HB-EGF. In the absence of c-Jun, tumor-prone K5-SOS-F transgenic mice develop smaller papillomas, with reduced expression of EGFR in basal keratinocytes. Thus, using three experimental systems, we show that EGFR and HB-EGF are regulated by c-Jun, which controls eyelid development, keratinocyte proliferation, and skin tumor formation.