Mice of the C57BL/6 strain are resistant to the development of skin squamous carcinomas (SCCs) induced by an activated Ras oncogene, whereas FVB/N mice are highly susceptible. The genetic basis of this difference in phenotype is unknown. Here we show that susceptibility to SCC is under the control of a carboxy-terminal polymorphism in the mouse Ptch gene. F1 hybrids between C57BL/6 and FVB/N strains ((B6FVB)F1) are resistant to Ras-induced SCCs, but resistance can be overcome either by elimination of the C57BL/6 Ptch allele (Ptch(B6)) or by overexpression of the FVB/N Ptch allele (Ptch(FVB)) in the epidermis of K5Hras-transgenic (B6FVB)F1 hybrid mice. The human Patched (PTCH) gene is a classical tumour suppressor gene for basal cell carcinomas and medulloblastomas, the loss of which causes increased signalling through the Sonic Hedgehog (SHH) pathway. SCCs that develop in PtchB6+/- mice do not lose the wild-type Ptch gene or show evidence of increased SHH signalling. Although Ptch(FVB) overexpression can promote SCC formation, continued expression is not required for tumour maintenance, suggesting a role at an early stage of tumour cell lineage commitment. The Ptch polymorphism affects Hras-induced apoptosis, and binding to Tid1, the mouse homologue of the Drosophila l(2)tid tumour suppressor gene. We propose that Ptch occupies a critical niche in determining basal or squamous cell lineage, and that both tumour types can arise from the same target cell depending on carcinogen exposure and host genetic background.