The changes in cell dynamics after oncogenic mutation that lead to the development of tumours are currently unknown. Here, using skin epidermis as a model, we assessed the effect of oncogenic hedgehog signalling in distinct cell populations and their capacity to induce basal cell carcinoma, the most frequent cancer in humans. We found that only stem cells, and not progenitors, initiated tumour formation upon oncogenic hedgehog signalling. This difference was due to the hierarchical organization of tumour growth in oncogene-targeted stem cells, characterized by an increase in symmetric self-renewing divisions and a higher p53-dependent resistance to apoptosis, leading to rapid clonal expansion and progression into invasive tumours. Our work reveals that the capacity of oncogene-targeted cells to induce tumour formation is dependent not only on their long-term survival and expansion, but also on the specific clonal dynamics of the cancer cell of origin.