In keratinocytes, the β1 integrins mediate adhesion to the extracellular matrix and also regulate the initiation of terminal differentiation. To explore the relationship between these functions, we stably infected primary human epidermal keratinocytes and an undifferentiated squamous cell carcinoma line, SCC4, with retroviruses encoding wild-type and mutant chick β1 integrin subunits. We examined the ability of adhesion-blocking chick β1-specific antibodies to inhibit suspension-induced terminal differentiation of primary human keratinocytes and the ability of the chick β1 subunit to promote spontaneous differentiation of SCC4. A D154A point mutant clustered in focal adhesions but was inactive in the differentiation assays, showing that differentiation regulation required a functional ligand-binding domain. The signal transduced by β1 integrins in normal keratinocytes was “do not differentiate” (transduced by ligand-occupied receptors) as opposed to “do differentiate” (transduced by unoccupied receptors), and the signal depended on the absolute number, rather than on the proportion, of occupied receptors. Single and double point mutations in cyto-2 and -3, the NPXY motifs, prevented focal adhesion targeting without inhibiting differentiation control. However, deletions in the proximal part of the cytoplasmic domain, affecting cyto-1, abolished the differentiation-regulatory ability of the β1 subunit. We conclude that distinct signaling pathways are involved in β1 integrin–mediated adhesion and differentiation control in keratinocytes.