The homozygous repeated epilation (Er/Er) mouse mutant of the gene encoding 14-3-3σ displays an epidermal phenotype characterized by hyperproliferative keratinocytes and undifferentiated epidermis. Heterozygous Er/+ mice develop spontaneous skin tumors and are highly sensitive to tumor-promoting 7,12-dimethylbenzanthracene/12-O-tetradecanoyl-phorbol-13-acetate induction. The molecular mechanisms underlying 14-3-3σ regulation of epidermal proliferation, differentiation, and tumor formation have not been well elucidated. In this study, we found that Er/Er keratinocytes failed to sequester Yap1 in the cytoplasm, leading to its nuclear localization during epidermal development in vivo and under differentiation-inducing culture conditions in vitro. In addition, enhanced Yap1 nuclear localization was also evident in 7,12-dimethylbenzanthracene/12-O-tetradecanoyl-phorbol-13-acetate-induced tumors from Er/+ skin. Furthermore, short hairpin RNA (shRNA) knockdown of Yap1 expression in Er/Er keratinocytes inhibited their proliferation, suggesting that YAP1 functions as a downstream effector of 14-3-3σ controlling epidermal proliferation. We then demonstrated that keratinocytes express all seven 14-3-3 protein isoforms, some of which form heterodimers with 14-3-3σ, either full-length wild type (WT) or the mutant form found in Er/Er mice. However, Er 14-3-3σ does not interact with Yap1, as demonstrated by coimmunoprecipitation. We conclude that Er 14-3-3σ disrupts the interaction between 14-3-3 and Yap1, and thus fails to block Yap1 nuclear transcriptional function, causing continued progenitor expansion and inhibition of differentiation in the Er/Er epidermis.