Arsenic is a carcinogen with transplacental activity that can affect human skin stem cell population dynamics in vitro by blocking exit into differentiation pathways. Keratinocyte stem cells (KSC) are probably a key target in skin carcinogenesis. Thus, we tested the effects of fetal arsenic exposure in Tg.AC mice, a strain sensitive to skin carcinogenesis via activation of the v-Ha-ras transgene likely in KSCs. After fetal arsenic treatment, offspring received topical 12-O-tetradecanoyl phorbol-13-acetate (TPA) through adulthood. Arsenic alone had no effect, whereas TPA alone induced papillomas and squamous cell carcinomas (SCC). However, fetal arsenic treatment before TPA increased SCC multiplicity 3-fold more than TPA alone, and these SCCs were much more aggressive (invasive, etc.). Tumor v-Ha-ras levels were 3-fold higher with arsenic plus TPA than TPA alone, and v-Ha-ras was overexpressed early on in arsenic-treated fetal skin. CD34, considered a marker for both KSCs and skin cancer stem cells, and Rac1, a key gene stimulating KSC self-renewal, were greatly increased in tumors produced by arsenic plus TPA exposure versus TPA alone, and both were elevated in arsenic-treated fetal skin. Greatly increased numbers of CD34-positive probable cancer stem cells and marked overexpression of RAC1 protein occurred in tumors induced by arsenic plus TPA compared with TPA alone. Thus, fetal arsenic exposure, although by itself oncogenically inactive in skin, facilitated cancer response in association with distorted skin tumor stem cell signaling and population dynamics, implicating stem cells as a target of arsenic in the fetal basis of skin cancer in adulthood. [Cancer Res 2008;68(20):8278-85]