STAT3, a pleiotropic transcription factor acting downstream of cytokines and growth factors, is known to enhance proliferation, migration, invasion and aerobic glycolysis in tumors upon aberrant activation. In the murine epidermis, STAT3 is necessary for experimentally induced carcinogenesis. Skin tumorigenesis is conversely enhanced by overexpression in keratinocytes of the constitutively active STAT3C mutant, which also induces robust, psoriasis-like epidermal hyperplasia. We show here that STAT3C expression at physiological levels in knock-in mice leads to mild epidermal hyperplasia and attenuated expression of terminal differentiation markers. Altered differentiation is confirmed in isolated primary epidermal keratinocytes in vitro, correlating with enhanced proliferative and clonogenic potential, attenuated senescence and, strikingly, high-frequency spontaneous immortalization. These results suggest that moderate levels of continuous STAT3 activation, which closely resemble those triggered by chronic inflammation or persistent growth factor stimulation, may establish a preneoplastic state in part by promoting the escape of epidermal progenitor cells from differentiation and senescence checkpoints.