Serial analysis of gene expression (SAGE) has been used for quantitative analysis of gene expression. We applied cluster analysis on multiple SAGE libraries derived from premalignant epidermal tissue (actinic keratosis), normal human epidermis, and cultured keratinocytes. The samples were obtained from skin biopsies without contamination by dermal tissue or blood. A total of 60,000 transcripts (tags) were analyzed. Two-way cluster analysis was applied to both the transcripts and the tissues, resulting in separation of the cultured cells from the epidermal samples, and clustering of many, presumably coregulated, genes. Two clusters of genes, strongly up-regulated in the tumor tissue compared with normal epidermis, were investigated in more detail. The differential expression of genes could be confirmed in actinic keratosis from four patients. Several of these genes have been previously associated with carcinogenesis or are likely to be important on the basis of their presumed function. Automated literature search tools show that a subgroup of these genes is coexpressed in other tissues and is part of an epidermal differentiation gene cluster on chromosome 1q21. We conclude that cluster analysis on large data sets uncovers clear partitions and correlations that could be confirmed by independent methods. We predict that these partitions will lead to biological interpretations that can be relevant for understanding the processes of carcinogenesis and tumor progression.