Ptch1 is a key regulator of embryonic development, acting through the sonic hedgehog (SHH) signaling pathway. Ptch1 is best known as a tumor suppressor, as germline or somatic mutations in Ptch1 lead to the formation of skin basal cell carcinomas. Here we show that Ptch1 also acts as a lineage-dependent oncogene, as overexpression of Ptch1 in adult skin in K14Ptch(FVB) transgenic mice synergizes with chemically induced Hras mutations to promote squamous carcinoma development. These effects were not because of aberrant activation of SHH signaling by the K14Ptch(FVB) transgene, as developmental defects in the highest expressing transgenic lines were consistent with the inhibition of this pathway. Carcinomas from K14Ptch(FVB) transgenic mice had only a small number of nonproliferative Ptch1 transgene-positive cells, suggesting that the Ptch1 transgene is not required for tumor maintenance, but may have a critical role in cell-fate determination at the initiation stage.