In stratifying cultures of human keratinocytes, expression of the proto-oncoprotein c-JUN and the small proline rich 2 (SPRR2) protein, a precursor of the cornified cell envelope, are inversely related, Whereas c-JUN is typically found in basal proliferating cells, SPRR2 is restricted to suprabasal differentiating layers. Malignant keratinocytes (derived from squamous cell carcinoma, SCC) have reduced sprr2 expression, consistent with their low potential to differentiate, and express c-jun at higher levels than normal keratinocytes. A direct relation between c-jun and sprr2 expression was shown in several ways: transient ectopic expression of c-jun inhibits sprr2a promoter activity in normal differentiating cells, whereas in malignant keratinocytes a dominant negative c-jun mutant restored at least partially both the low promoter activity and the expression of endogenous sprr2. These effects are mediated via a 134 bp promoter fragment which does not include the sprr2a AP-1 binding site. Interestingly, in an SCC cell line, constitutively expressing the dominant c-jun mutant, expression of the terminal differentiation marker involucrin is also strongly increased, suggesting that c-Jun is a general modulator of keratinocyte terminal differentiation rather than only affecting the expression of sprr2.