Angiogenesis is critical during tumour initiation and malignant progression. Different strategies aimed at blocking vascular endothelial growth factor (VEGF) and its receptors have been developed to inhibit angiogenesis in cancer patients. It has become increasingly clear that in addition to its effect on angiogenesis, other mechanisms including a direct effect of VEGF on tumour cells may account for the efficiency of VEGF-blockade therapies. Cancer stem cells (CSCs) have been described in various cancers including squamous tumours of the skin. Here we use a mouse model of skin tumours to investigate the impact of the vascular niche and VEGF signalling on controlling the stemness (the ability to self renew and differentiate) of squamous skin tumours during the early stages of tumour progression. We show that CSCs of skin papillomas are localized in a perivascular niche, in the immediate vicinity of endothelial cells. Furthermore, blocking VEGFR2 caused tumour regression not only by decreasing the microvascular density, but also by reducing CSC pool size and impairing CSC renewal properties. Conditional deletion of Vegfa in tumour epithelial cells caused tumours to regress, whereas VEGF overexpression by tumour epithelial cells accelerated tumour growth. In addition to its well-known effect on angiogenesis, VEGF affected skin tumour growth by promoting cancer stemness and symmetric CSC division, leading to CSC expansion. Moreover, deletion of neuropilin-1 (Nrp1), a VEGF co-receptor expressed in cutaneous CSCs, blocked VEGF's ability to promote cancer stemness and renewal. Our results identify a dual role for tumour-cell-derived VEGF in promoting cancer stemness: by stimulating angiogenesis in a paracrine manner, VEGF creates a perivascular niche for CSCs, and by directly affecting CSCs through Nrp1 in an autocrine loop, VEGF stimulates cancer stemness and renewal. Finally, deletion of Nrp1 in normal epidermis prevents skin tumour initiation. These results may have important implications for the prevention and treatment of skin cancers.