p120‐catenin (p120) serves as a stabilizer of the calcium‐dependent cadherin‐catenin complex and loss of p120 expression has been observed in several types of human cancers. The p120‐dependent E‐cadherin‐β‐catenin complex has been shown to mediate calcium‐induced keratinocyte differentiation via inducing activation of plasma membrane phospholipase C‐γ1 (PLC‐γ1). On the other hand, PLC‐γ1 has been shown to interact with phosphatidylinositol 3‐kinase enhancer in the nucleus and plays a critical role in epidermal growth factor‐induced proliferation of oral squamous cell carcinoma (OSCC) cells. To determine whether p120 suppresses OSCC proliferation and tumor growth via inhibiting PLC‐γ1, we examined effects of p120 knockdown or p120 and PLC‐γ1 double knockdown on proliferation of cultured OSCC cells and tumor growth in xenograft OSCC in mice. The results showed that knockdown of p120 reduced levels of PLC‐γ1 in the plasma membrane and increased levels of PLC‐γ1 and its signaling in the nucleus in OSCC cells and OSCC cell proliferation as well as xenograft OSCC tumor growth. However, double knockdown of p120 and PLC‐γ1 or knockdown of PLC‐γ1 alone did not have any effect. Immunohistochemical analysis of OSCC tissue from patients showed a lower expression level of p120 and a higher expression level of PLC‐γ1 compared with that of adjacent noncancerous tissue. These data indicate that p120 suppresses OSCC cell proliferation and tumor growth by inhibiting signaling mediated by nuclear PLC‐γ1.