We have defined the developmental transcription factor Grainyhead-like 3 (Grhl3) as a critical tumour suppressor in squamous cell carcinoma (SCC) of the skin in both mice and humans. Grhl3-deficient mice (Grhl3 cKO) develop spontaneous and chemically-induced SCCs that are driven by the PI3K signalling pathway. In human SCC, a microRNA-21 proto-oncogenic network targets Grhl3 and Pten, also resulting in PI3K activation. Here we show that treatment of Grhl3 cKO mice in the tumour initiation stage with a PI3K/mTOR dual inhibitor (BEZ235) for intervals as short as four weeks completely blocks the development of SCC, suggesting that the cancer initiating cells are targeted by this therapy. In contrast, established cancers in these animals do not respond to BEZ235, indicative of addition oncogenic drivers acquired with tumour progression. Consistent with this, xenografts of Grhl3-deficient human SCC cells in immunocompromised mice show limited regression under BEZ235 treatment alone. However, the combination of antagomirs of microRNA-21 to the treatment regimen induces spectacular responses in a subset of SCC. Taken together, our data indicate that PI3K signalling is indispensable for SCC initiation in the context of Grhl3 loss, but as tumours progress, additional oncogenic drivers contribute to resistance to PI3K/mTOR inhibitors. Establishing the identity of these drivers is critical for the development of additional therapeutic options in metastatic SCC.