The transcription factor p63 is important in the development of the skin as p63-null mice exhibit striking defects in embryonic epidermal morphogenesis. Understanding the mechanisms that underlie this phenotype is complicated by the existence of multiple p63 isoforms, including TAp63 and ΔNp63. To investigate the role of ΔNp63 in epidermal morphogenesis we generated ΔNp63 knock-in mice in which the ΔNp63-specific exon is replaced by GFP. Homozygous ΔNp63^gfp/gfp animals exhibit severe developmental anomalies including truncated forelimbs and the absence of hind limbs, largely phenocopying existing knockouts in which all p63 isoforms are deleted. ΔNp63-null animals show a poorly developed stratified epidermis comprising isolated clusters of disorganized epithelial cells. Despite the failure to develop a mature stratified epidermis, the patches of ΔNp63-null keratinocytes are able to stratify and undergo a program of terminal differentiation. However, we observe premature expression of markers associated with terminal differentiation, which is unique to ΔNp63-null animals and not evident in the skin of mice lacking all p63 isoforms. We posit that the dysregulated and accelerated keratinocyte differentiation phenotype is driven by significant alterations in the expression of key components of the Notch signaling pathway, some of which are direct transcriptional targets of ΔNp63 as demonstrated by ChIP experiments. The analysis of ΔNp63^gfp/gfp knockout mice reaffirms the indispensable role of the ΔN isoform of p63 in epithelial biology and confirms that ΔNp63-null keratinocytes are capable of committing to an epidermal cell lineage, but are likely to suffer from diminished renewal capacity and an altered differentiation fate.