Tumor Susceptibility Gene 101, TSG101, exhibits multiple biological functions including the regulation of gene transcription, vesicular trafficking, cellular growth and differentiation. However, the signals involve in the regulation of TSG101 gene functions are unclear. In this present study, we observed congruous TSG101 up-regulation and the differentiation status of keratinocyte in both human foreskin tissue and reconstructed organotypic skin culture. In addition, we found an essential and downstream role of TSG101 in calcium-induced early keratinocyte differentiation since TSG101 siRNA inhibits this process. Our results also indicate a PKC-dependent mechanism is involved based on the following findings. First, a PKC agonist, TPA up-regulates TSG101 and keratin 10 under low calcium condition. Second, co-treatment of keratinocytes with GF 109203X, a PKC inhibitor, blocks TPA-induced TSG101 and keratin 10 up-regulation. Previous report indicates TSG101 gene exhibits a TATA-less and Sp1-containing promoter. Our analysis further shows that both calcium and TPA stimulate phosphorylation of Sp1 and the corresponding TSG101 wild type promoter activity, but not the activity of Sp1 site mutant TSG101 promoter. The co-treatment with GF 109203X blocks the above effects of calcium and TPA, implying that this is a PKC signaling-dependent process. Taken together, these data suggest a PKC-Sp1 signaling is involved in early differentiation switch of keratinocyte through up-regulation of TSG101. Functional inactivation experiment indicates that tsg101 is a tumor suppressor in mouse model. However, many studies using human tumor specimens or conditional knockout mouse give discrepant and contradictive results. Therefore, the role of TSG101 in human cancer remains illusive. Here we demonstrate an inverse correlation between TSG101 and p16INK4a or acetylated- histone H4 protein expression profiles in human head and neck squamous cell carcinomas (HNSCC) (N=98, p<0.001). Using conditioned human HEp2 cells, we confirm that TSG101 negatively modulates p16INK4a expression. Chromatin immunoprecipitation and the subsequent PCR analysis reveal that TSG101 dose-dependently decreases the amount of acetylated histone H4-associated chromatin on p16INK4a promoter. In addition, TSG101 interacts and colocalizes with HDAC1 and SUMO-1 in the nucleus. Furthermore, TSG101 confers a dose-dependent effect on promoting HDAC1 SUMOylation, hence its activity. Taken together, our data demonstrate for the first time that TSG101 can promote SUMO-1 modification of HDAC1, which impacts on down-regulation of p16INK4a gene expression, providing evidence whereby TSG101 might participate in the epigenetic silencing of p16INK4a during the development of HNSCC.