When surface epithelium was conditionally targeted for ablation of alpha-catenin, hair follicle development was blocked and epidermal morphogenesis was dramatically affected, with defects in adherens junction formation, intercellular adhesion, and epithelial polarity. Differentiation occurred, but epidermis displayed hyperproliferation, suprabasal mitoses, and multinucleated cells. In vitro, alpha-catenin null keratinocytes were poorly contact inhibited and grew rapidly. These differences were not dependent upon intercellular adhesion and were in marked contrast to keratinocytes conditionally null for another essential intercellular adhesion protein, desmoplakin (DP). KO keratinocytes exhibited sustained activation of the Ras-MAPK cascade due to aberrations in growth factor responses. Thus, remarkably, features of precancerous lesions often attributed to defects in cell cycle regulatory genes can be generated by compromising the function of alpha-catenin.