Fanconi anemia (FA) is a rare genetic disorder characterized by an increased susceptibility to squamous cell cancers. Fifteen FA genes are known, and the encoded proteins cooperate in a common DNA repair pathway. A critical step is the monoubiquitination of the FANCD2 protein, and cells from most FA patients are deficient in this step. How monoubiquitinated FANCD2 suppresses squamous cell cancers is unknown. Here we show that Fancd2-deficient mice are prone to Ras-oncogene-driven skin carcinogenesis, while Usp1-deficient mice, expressing elevated cellular levels of Fancd2-Ub, are resistant to skin tumors. Moreover, Fancd2-Ub activates the transcription of the tumor suppressor TAp63, thereby promoting cellular senescence and blocking skin tumorigenesis. For FA patients, the reduction of FANCD2-Ub and TAp63 protein levels may account for their susceptibility to squamous cell neoplasia. Taken together, Usp1 inhibition may be a useful strategy for upregulating TAp63 and preventing or treating squamous cell cancers in the general non-FA population.