iASPP, an inhibitory member of the ASPP (apoptosis stimulating protein of p53) family, is an evolutionarily conserved inhibitor of p53 which is frequently upregulated in human cancers. However, little is known about the role of iASPP under physiological conditions. Here, we report that iASPP is a critical regulator of epithelial development. We demonstrate a novel autoregulatory feedback loop which controls crucial physiological activities by linking iASPP to p63, via two previously unreported microRNAs, miR-574-3p and miR-720. By investigating its function in stratified epithelia, we show that iASPP participates in the p63-mediated epithelial integrity program by regulating the expression of genes essential for cell adhesion. Silencing of iASPP in keratinocytes by RNA interference promotes and accelerates a differentiation pathway, which also affects and slowdown cellular proliferation. Taken together, these data reveal iASPP as a key regulator of epithelial homeostasis.