The p53 homolog p63 is essential for development, yet its role in cancer is not clear. We discovered that p63 deficiency evokes the tumor-suppressive mechanism of cellular senescence, causing a striking absence of stratified epithelia such as the skin. Here we identify the predominant p63 isoform, ΔNp63α, as a protein that bypasses oncogene-induced senescence to drive tumorigenesis in vivo. Interestingly, bypass of senescence promotes stem-like proliferation and maintains survival of the keratin 15-positive stem cell population. Furthermore, we identify the chromatin-remodeling protein Lsh as a new target of ΔNp63α that is an essential mediator of senescence bypass. These findings indicate that ΔNp63α is an oncogene that cooperates with Ras to promote tumor-initiating stem-like proliferation and suggest that Lsh-mediated chromatin-remodeling events are critical to this process.