The origin of the signal for keratinocyte differentiation is still unknown. Here, we show that Ca2+- and density-induced translocation of E-cadherin, but not P-cadherin, is accompanied by induction of differentiation-specific proteins in cultured keratinocytes. Antibodies that artificially cluster cell-surface E-cadherin in low extracellular Ca2+ also induce differentiation-specific proteins, implicating E-cadherin as a determinant of keratinocyte differentiation in vitro.