The T‐box transcription factor, Tbx1, an important regulatory gene in development, is highly expressed in hair follicle (HF) stem cells in adult mice. Because mouse models of skin carcinogenesis have demonstrated that HF stem cells are a carcinogen target population and contribute significantly to tumor development, we investigated whether Tbx1 plays a role in skin carcinogenesis. We first assessed Tbx1 expression levels in mouse skin tumors, and found down‐regulation in all tumors examined. To study the effect of Tbx1 expression on growth and tumorigenic potential of carcinoma cells, we transfected mouse Tbx1 cDNA into a mouse spindle cell carcinoma cell line that did not express endogenous Tbx1. Following transfection, two cell lines expressing different levels of the Tbx1/V5 fusion protein were selected for further study. Intradermal injection of the cell lines into mice revealed that Tbx1 expression significantly suppressed tumor growth, albeit with no change in tumor morphology. In culture, ectopic Tbx1 expression resulted in decreased cell growth and reduced development into multilayered colonies, compared to control cells. Tbx1‐transfectants exhibited a reduced proliferative rate compared to control cells, with fewer cells in S and G2/M phases. The Tbx1 transfectants developed significantly fewer colonies in soft agar, demonstrating loss of anchorage‐independent growth. Taken together, our data show that ectopic expression of Tbx1 restored contact inhibition to the skin tumor cells, suggesting that this developmentally important transcription factor may have a novel dual role as a negative regulator of tumor growth. © 2011 Wiley Periodicals, Inc.