As a skin appendage organ, the hair follicle provides an excellent paradigm to study tissue homeostasis as adult hair follicles continuously undergo cycles of growth (anagen), regression (catagen), and rest (telogen). BRCA-associated protein 1 (BAP1) is a tumor suppressing de-ubiquitinase best known for its roles in the polycomb repressive complex and hereditary malignant mesothelioma predisposition. To explore its potential role in skin development, we developed a conditional knockout (KO) mouse model of BAP1. Tissue-specific loss of BAP1 in skin epithelial cells driven by Krt14-Cre does not significantly alter epidermal stratification or skin wound repair in vivo. However, BAP1 loss in the skin leads to significant alopecia and altered hair cycle progression in adult skin. In determining the underlying molecular mechanisms, we found that BAP1 ablation inhibits TGFβ signaling and catagen entry in vivo. Using primary murine keratinocytes isolated from BAP1 KO skin, our study further indicates that BAP1 plays a critical role in TGFβ signal transduction by protecting phosphorylated SMAD2 from proteosome-mediated degradation through BAP1’s de-ubiquitinase activity. Together, our findings identify an important molecular mechanism underlying the hair cycle and present valuable insight into the roles of BAP1 in skin tissue homeostasis and TGFβ signaling.