This study used the induction of squamous cell carcinomas on mouse skin as an experimental model to evaluate molecular and biochemical changes that contribute to the neoplastic phenotype. The study was facilitated by the development of keratinocyte cell culture assays that reproduce each stage of the carcinogenesis process, by discoveries of stage-specific genetic and epigenetic changes and by application of pharmacological and molecular tools that modify each step. An early event in the transformation of keratinocytes involves mutation and activation of the rasHa gene, producing a benign tumor. The phenotypic consequences of ras mutations are mediated by activation of the epidermal growth factor receptor (EGFR), upregulation of protein kinase C (PKC) alpha and AP-1 mediated transcriptional activity and inactivation of PKC delta through tyrosine phosphorylation. These changes in benign tumors are manifested by hyperproliferation (EGFR), aberrant expression of keratinocyte genes (PKC alpha and AP-1) and delayed terminal differentiation (PKC delta). Accumulated chromosomal abnormalities, multifocal phenotypic changes and alterations in gene expression are associated with premalignant progression. Upregulation of the fos gene and AP-1 transcriptional activity causes malignant conversion of benign keratinocytes. In the absence of c-fos, benign tumor cells fail to upregulate secreted angiogenic and proteolytic factors and this may prevent malignant conversion. These pathways provide targets for preventive strategies to interrupt the process of carcinogenesis prior to the evolution of the fully malignant tumor.