CD109, a glycosylphosphatidylinositol-anchored glycoprotein, is highly expressed in several types of human cancer tissues, in particular, squamous cell carcinomas. In normal human tissues, human CD109 expression is limited to certain cell types including myoepithelial cells of the mammary, lacrimal, salivary, and bronchial glands and basal cells of the prostate and bronchial epithelium. Although CD109 has been reported to negatively regulate transforming growth factor-β signaling in keratinocytes in vitro, its physiologic role in vivo remains largely unknown. To investigate the function of CD109 in vivo, we generated CD109-deficient (CD109^−/−) mice. Although CD109^−/− mice were born normally, transient impairment of hair growth was observed. At histologic analysis, kinked hair shafts, ectatic hair follicles with an accumulation of sebum, and persistent hyperplasia of the epidermis and sebaceous glands were observed in CD109^−/− mice. Immunohistochemical analysis revealed thickening of the basal and suprabasal layers in the epidermis of CD109^−/− mice, which is where endogenous CD109 is expressed in wild-type mice. Although CD109 was reported to negatively regulate transforming growth factor-β signaling, no significant difference in levels of Smad2 phosphorylation was observed in the epidermis between wild-type and CD109^−/− mice. Instead, Stat3 phosphorylation levels were significantly elevated in the epidermis of CD109^−/− mice compared with wild-type mice. These results suggest that CD109 regulates differentiation of keratinocytes via a signaling pathway involving Stat3.