The microbial alkaloid staurosporine induces responses associated with protein kinase C activation, resulting in terminal differentiation in cultures of both normal and neoplastic mouse epidermal cells. As a cancer chemotherapy model, we treated grafts of mouse epidermal tumor cell lines 308 and SP-1 repeatedly with staurosporine. A dose-dependent inhibition of tumor formation, maximal at 0.025 nmol per treatment, was observed. Higher and lower doses were less effective, suggesting a specific target for staurosporine action. A single, low-dose treatment 2 weeks after grafting also markedly reduced tumor formation. Although in vitro evidence suggests that staurosporine-induced terminal squamous differentiation results from activation of protein kinase C, we found no inhibition of tumor growth in similar studies with the protein kinase C activator 12-O-tetradecanoylphorbol-13-acetate. These results indicate that staurosporine is an effective antitumor agent for eradicating squamous cell tumors in vivo.