In this study, we have characterized the cDNA clone SQ37 that was isolated previously from a rabbit squamous cell library. The gene encodes a 14-kDa protein that appears to function as a component of the cross-linked envelope in squamous differentiating cells. The protein, which has been named cornifin, has a high content of proline (31%), glutamine (20%), and cysteine (11%) and contains 13 repeats of an octapeptide (consensus sequence, EPCQPKVP) at its C terminus. SQ37 mRNA and protein are induced during squamous differentiation of rabbit tracheal (RbTE) cells and human epidermal keratinocytes. This induction is repressed by retinoids. Immunohistochemical studies reveal SQ37 immunoreactivity in fragmented cross-linked envelopes from squamous-differentiated RbTE cells and in the suprabasal layers of the epidermis. In situ hybridization analysis showed that the presence of SQ37 mRNA is restricted to the suprabasal layers. Treatment of RbTE cells with a Ca2+ ionophore induces cross-linking of the SQ37 protein into higher molecular weight complexes. This cross-linking reaction appears to be mediated by transglutaminase type I. Our observations suggest that the protein encoded by SQ37 participates in the assembly of the cross-linked envelope.