Molecular pathways underlying tumor suppression are incompletely understood. Here, we identify cooperative non-cell-autonomous functions of one and the same gene as a novel mechanism of tumor suppression in basal keratinocytes of zebrafish embryos. A loss-of-function mutation in atp1b1a, encoding the beta subunit of a Na,K-ATPase pump, causes edema and epidermal malignancy. Strikingly, basal cell carcinogenesis only occurs when Atp1b1a function is compromised in both the overlying periderm (resulting in compromised epithelial polarity and adhesiveness) and in kidney and heart (resulting in hypotonic stress). Blockade of the ensuing PI3K-AKT-mTORC1-NFκB-MMP9 pathway activation in basal cells, as well as systemic isotonicity, prevents malignant transformation. Our results identify hypotonic stress as a thus far unrecognized contributor to tumor development and establish a novel paradigm of tumor suppression.