Basal cell carcinoma (BCC) of the skin is a highly compact, non-metastatic epithelial tumour type that may arise from the aberrant propagation of epidermal or progenitor stem cell (SC) populations. Increased expression of GLI1 is a common feature of BCC and is linked to the induction of epidermal SC markers in immortalized N/Tert-1 keratinocytes. Here, we demonstrate that GLI1 over-expression is linked to additional SC characteristics in N/Tert-1 cells including reduced epidermal growth factor receptor (EGFR) expression and compact colony formation that is associated with repressed extracellular signal-regulated kinase (ERK) activity. Colony formation and repressed ERK activity remain evident when EGFR is increased exogenously to the basal levels in GLI1 cells revealing that ERK is additionally inhibited downstream of the receptor. Exposure to epidermal growth factor (EGF) to increase ERK activity and promote migration negates GLI1 colony formation with cells displaying an elongated, fibroblast-like morphology. However, as determined by Snail messenger RNA and E-cadherin protein expression this is not associated with epithelial-mesenchymal transition (EMT), and GLI1 actually represses induction of the EMT marker vimentin in EGF-stimulated cells. Instead, live cell imaging revealed that the elongated morphology of EGF/GLI1 keratinocytes stems from their being 'stretched' due to migrating cells displaying inefficient cell-cell detachment and impaired tail retraction. Taken together, these data suggest that GLI1 opposes EGFR signalling to maintain the epithelial phenotype. Finally, ERK activity was predominantly negative in 13/14 BCCs (superficial/nodular), indicating that GLI1 does not routinely co-operate with ERK to induce the formation of this common skin tumour.