Growth control of epithelial cells differs substantially from other cell types. Activation of Fyn, a Src kinase family member, is required for normal keratinocyte differentiation. We report that increased Fyn activity by itself suppresses growth of keratinocytes, but not dermal fibroblasts, through downmodulation of EGF receptor (EGFR) signaling. Protein kinase C-eta has also been implicated in keratinocyte growth/differentiation control. We show that growth suppression of keratinocytes by PKC-eta depends mostly on Fyn. PKC-eta activity is both necessary and sufficient for Fyn activation, PKC-eta and Fyn are found in association, and recombinant PKC-eta directly activates Fyn. Thus, our findings reveal a direct cross talk between PKC-eta and Fyn, which presides over the decision between keratinocyte (epithelial) cell growth and differentiation.