Basal cell carcinoma (BCC) is the most common malignant tumour arising from the basal cells of the epidermis or follicular structures. The aetiology of BCC is a multifactorial combination of genotype, phenotype and environmental factors. The pathogenesis of BCC remains unclear, with diverse and complex signalling pathways involved. ARHGAP40 is a Rho GTPase‐activating protein (RhoGAP). Rho GTPases play a crucial role in the formation and progression of numerous cancers. The expression levels and roles of ARHGAP40 in BCC have not been explored. Here, ARHGAP40 expression was detected in a set of formalin‐fixed, paraffin‐embedded (FFPE) samples of basal cell carcinoma, paracancerous normal skin and benign skin lesions. The epigenetic mechanism that downregulates ARHGAP40 in basal cell carcinoma was investigated. We found that ARHGAP40 is expressed in normal basal cells and most benign skin lesions but lost in most basal cell carcinomas. We detected CpG island hypermethylation at the promoter‐associated region of ARHGAP40. Our data suggest that ARHGAP40 is downregulated in BCC due to hypermethylation. ARHGAP40 protein is a potential novel biomarker for distinguishing trichoblastoma from BCC. This report is preliminary, and extensive research into the role of ARHGAP40 in BCC carcinogenesis and its potential as a treatment target is required in the future.