One major defining characteristic of the basal keratinocytes of the stratified epithelium is the expression of the keratin genes K5 and K14. The temporal and spatial expression of these two genes is usually tightly and coordinately regulated at the transcriptional level. This ensures the obligate pairing of K5 and K14 proteins to generate an intermediate filament (IF) network that is essential for the structure and function of the proliferative keratinocytes. Our previous studies have shown that the basal-keratinocyte restricted transcription factor p63 is a direct regulator of K14 gene.Here we provide evidence that p63, specifically the DeltaN isoform also regulates the expression of the K5 gene by binding to a conserved enhancer within the 5' upstream region. By using specific antibodies against DeltaNp63, we show a concordance in the expression between basal keratins and DeltaNp63 proteins but not the TAp63 isoforms during early embryonic skin development. We demonstrate, that contrary to a previous report, transgenic mice expressing DeltaNp63 in lung epithelium exhibit squamous metaplasia with de novo induction of K5 and K14 as well as transdifferentiation to the epidermal cell lineage. Interestingly, the in vivo epidermal inductive properties of DeltaNp63 do not require the C-terminal SAM domain. Finally, we show that DeltaNp63 alone can restore the expression of the basal keratins and reinitiate the failed epidermal differentiation program in the skin of p63 null animals.DeltaNp63 is a critical mediator of keratinocyte stratification program and directly regulates the basal keratin genes.