Immunosuppressive therapies using calcineurin inhibitors, such as cyclosporine A, are associated with a higher incidence of squamous cell carcinoma formation in mice and humans. Calcineurin is believed to suppress tumorigenesis in part through Nfatc1, a transcription factor expressed primarily in hair follicle bulge stem cells in mice. However, mice overexpressing a constitutively active Nfatc1 isoform in the skin epithelium developed increased spontaneous skin squamous cell carcinomas. Because follicular stem cells can contribute to skin tumorigenesis, whether the endogenous expression of Nfatc1 inhibits or enhances skin tumorigenesis is unclear. Here we show that loss of the endogenous expression of Nfatc1 suppresses the rate of DMBA/TPA-induced skin tumorigenesis. Inducible deletion of Nfatc1 in follicular stem cells before tumor initiation significantly reduces the rate of tumorigenesis and the contribution of follicular stem cells to skin tumors. We find that skin tumors from mice lacking Nfatc1 display reduced Hras codon 61 mutations. Furthermore, Nfatc1 enhances the expression of genes involved in DMBA metabolism and increases DMBA-induced DNA damage in keratinocytes. Together these data implicate Nfatc1 in the regulation of skin stem cell-initiated tumorigenesis via the regulation of DMBA metabolism.