Interactions between mesenchymal and epithelial cells are responsible for organogenesis and tissue homeostasis. This mutual cross-talk involves cell surface proteins and soluble factors, which are mostly the result of regulated transcription. To elucidate dimer-specific functions of the AP-1 family of transcription factors, we reconstituted skin by combining primary human keratinocytes and mouse wild-type, c-jun^−/−, and junB^−/− fibroblasts. We have discovered an antagonistic function of these AP-1 subunits in the fibroblast-mediated paracrine control of keratinocyte proliferation and differentiation, and traced this effect to the IL-1-dependent regulation of KGF and GM-CSF. These data suggest that the relative activation state of these AP-1 subunits in a non-cell-autonomous, transregulatory fashion directs regeneration of the epidermis and maintenance of tissue homeostasis in skin.