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Abstract Tumor necrosis factor-α-induced protein 8 (TNFAIP8) is a member of the TIPE/TNFAIP8 family which regulates tumor growth and survival. Our goal is to delineate the detailed oncogenic role of TNFAIP8 in skin cancer development and progression. Here we demonstrated that higher expression of TNFAIP8 is associated with basal cell carcinoma (BCC), squamous cell carcinoma (SCC), and melanoma development in patient tissues. Induction of TNFAIP8 expression by TNFα or by ectopic expression of TNFAIP8 in SCC or melanoma cell lines resulted in increased cell growth/proliferation. Conversely, silencing of TNFAIP8 decreased cell survival/cell migration in skin cancer cells. We also showed that miR-205-5p targets the 3′UTR of TNFAIP8 and inhibits TNFAIP8 expression. Moreover, miR-205-5p downregulates TNFAIP8 mediated cellular autophagy, increased sensitivity towards the B-RAFV600E mutant kinase inhibitor vemurafenib, and induced cell apoptosis in melanoma cells. Collectively our data indicate that miR-205-5p acts as a tumor suppressor in skin cancer by targeting TNFAIP8.