Altered epidermal differentiation characterizes numerous skin diseases affecting >25% of the human population. Here we identified Fra-2/AP-1 as a key regulator of terminal epidermal differentiation. Epithelial-restricted, ectopic expression of Fra-2 induced expression of epidermal differentiation genes located within the epidermal differentiation complex (EDC). Moreover, in a papilloma-prone background, a reduced tumor burden was observed due to precocious keratinocyte differentiation by Fra-2 expression. Importantly, loss of Fra-2 in suprabasal keratinocytes is sufficient to cause skin barrier defects due to reduced expression of differentiation genes. Mechanistically, Fra-2 binds and transcriptionally regulates EDC gene promoters, which are co-occupied by the transcriptional repressor Ezh2. Fra-2 remains transcriptionally inactive in nondifferentiated keratinocytes, where it was found monomethylated and dimethylated on Lys104 and interacted with Ezh2. Upon keratinocyte differentiation, Fra-2 is C-terminally phosphorylated on Ser320 and Thr322 by ERK1/2, leading to transcriptional activation. Thus, the induction of epidermal differentiation by Fra-2 is controlled by a dual mechanism involving Ezh2-dependent methylation and activation by ERK1/2-dependent phosphorylation.