CYLD is a deubiquitination enzyme that regulates different cellular processes, such as cell proliferation and cell survival. Mutation and loss of heterozygosity of the CYLD gene causes development of cylindromatosis, a benign tumour originating from the skin. Our study shows that CYLD expression is dramatically downregulated in basal cell carcinoma (BCC), the most common cancer in humans. Reduced CYLD expression in basal cell carcinoma was mediated by GLI1-dependent activation of the transcriptional repressor Snail. Inhibition of GLI1 restored the CYLD expression-mediated Snail signaling pathway, and caused a significant delay in the G1 to S phase transition, as well as proliferation. Our data suggest that GLI1-mediated suppression of CYLD has a significant role in basal cell carcinoma progression.