The tumor suppressor Fbxw7 (also known as Sel-10, hCdc4, hAgo, or Fbw7) is an F-box protein that functions as the substrate-recognition subunit of an SCF ubiquitin ligase complex and targets a group of oncoproteins for degradation. We now show that Fbxw7 regulates the proliferation and differentiation of keratinocytes by mediating the degradation of c-Myc and Notch proteins. Fbxw7-deficient keratinocytes showed an increased proliferative capacity that was dependent on the accumulation of c-Myc but not on that of Notch. Fbxw7 deficiency also resulted in the premature differentiation of keratinocytes in a manner dependent on both c-Myc and Notch. Although Fbxw7-deficient keratinocytes proliferated excessively in vitro, loss of Fbxw7 did not predispose keratinocytes to the formation of squamous cell carcinoma in vivo induced by the expression of oncogenic Ras, possibly because the stem cell population of keratinocytes becomes exhausted as a result of enhanced Notch activity. Indeed, suppression of Notch signaling by additional ablation of RBP-J in Fbxw7-deficient keratinocytes conferred a more aggressive tumorigenic capacity. Collectively, these results indicate that Fbxw7 controls the proliferation and differentiation of keratinocytes, and that it exerts both inhibitory and stimulatory actions in skin carcinogenesis by counteracting the proliferation-promoting effect of c-Myc and the tumor-suppressive effect of Notch, respectively.