Squamous differentiation of keratinocytes is associated with decreases in E2F-1 mRNA expression and E2F activity, and these processes are disrupted in squamous cell carcinoma cell lines. We now show that E2F-1 mRNA expression is increased in primary squamous cell carcinomas of the skin relative to normal epidermis. To explore the relationship between E2F-1 and squamous differentiation further, we examined the effect of altering E2F activity in primary human keratinocytes induced to differentiate. Promoter activity for the proliferation-associated genes, cdc2 and keratin 14, are inhibited during squamous differentiation. This inhibition can be inhibited by overexpression of E2F-1 in keratinocytes. Overexpression of E2F-1 also suppressed the expression of differentiation markers (transglutaminase type 1 and keratin 10) in differentiated keratinocytes. Blocking E2F activity by transfecting proliferating keratinocytes with dominant negative E2F-1 constructs inhibited the expression of cdc2 and E2F-1, but did not induce differentiation. Furthermore, expression of the dominant negative construct in epithelial carcinoma cell lines and normal keratinocytes decreased expression from the cdc2 promoter. These data indicate that E2F-1 promotes keratinocyte proliferation-specific marker genes and suppresses squamous differentiation-specific marker genes. Moreover, these data indicate that targeted disruption of E2F-1 activity may have therapeutic potential for the treatment of squamous carcinomas. Oncogene (2000).