Epithelial tumorigenesis has been linked to AKT up-regulation. Human papillomaviruses (HPV) cause anogenital cancers and anogenital HPV infection up-regulates AKT activity. Mounting evidence points to a role for cutaneous HPVs as etiologic factors in skin tumorigenesis. High-risk cutaneous beta HPVs have been linked to carcinogenesis in immunosuppressed patients, and high-risk cutaneous HPV8 genes enhance tumorigenesis in transgenic mice. We find that, in contrast to anogenital HPVs, cutaneous HPV8 early genes down-regulate epidermal AKT activity by down-regulating AKT1 isoform levels. This down-regulation occurs before papilloma formation or tumorigenesis and leads to cutaneous differentiation changes that may weaken the epidermal squame for viral release. We find that, in viral warts (papillomas) and HPV gene-induced epidermal tumors, AKT activity can be activated focally by up-regulation and phosphorylation of the AKT2 isoform. In squamous cell carcinomas (SCC), AKT1 down-regulation is also common, consistent with a viral influence, whereas AKT2 up-regulation is widespread. Activation of up-regulated AKT2 by serine phosphorylation associates with high-grade tumors. Our data suggest that AKT2 up-regulation is characteristic of SCC and that coincident AKT2 activation through serine phosphorylation correlates with malignancy. These findings highlight differences between the effects of anogenital and cutaneous HPV on epithelial AKT activity and furthermore show that AKT isoforms can behave differently during epidermal tumorigenesis. These findings also suggest AKT2 as a possible therapeutic tumor target in SCC.