Epithelial differentiation and stratification are essential for normal homeostasis, and disruption of these processes leads to both injury and cancer. The zinc-finger transciption factor KLF4 is a key driver of epithelial differentiation, yet the mechanisms and targets by which KLF4 controls differentiation are not well understood. Here, we define WNT5A, a non-canonical Wnt ligand implicated in epithelial differentiation, repair, and cancer, as a direct transcriptional target that is activated by KLF4 in squamous epithelial cells. Further, we demonstrate functionally that WNT5A mediates KLF4 control of epithelial differentiation and stratification, as treatment of keratinocytes with WNT5A rescues defective epithelial stratification resulting from KLF4 loss. Finally, we show that the small GTPase CDC42 is regulated by KLF4 in a WNT5A dependent manner. As such, we delineate a novel pathway for epithelial differentiation and stratification and define potential therapeutic targets for epithelial diseases.