Although most cases of early cutaneous squamous cell carcinoma (CSCC) are indolent, a small subset metastasize and can be fatal. However, high-risk features of CSCC are controversial, and it is difficult to predict the biological behavior. In this study, we have tested the prognostic significance of tumor budding in CSCCs <4 cm in diameter. Hematoxylin and eosin-stained sections of surgically resected CSCCs (24 metastasizing and 24 nonmetastasizing cases) <4 cm in size were reviewed retrospectively. Tumor bud, defined as an isolated cancer cell or a cluster comprising<5 cells, was counted at a hot spot (1.23 mm), and graded between 1 and 3; grade 1: 0 to 4 buds; grade 2: 5 to 9 buds; and grade 3: ≥10 buds. Cases with grades 2 or 3 were regarded as positive for tumor budding. We found that tumor budding was positive in 83.3% of metastasizing CSCC, and 37.5% of nonmetastasizing CSCC (P<0.01). Moreover, CSCCs with grade 3 tumor budding showed worse disease-specific survival (P<0.01). Regarding interobserver reproducibility, the median κ value for tumor budding was significantly higher than that for histologic differentiation (P<0.01). In conclusion, tumor budding may be a valuable histologic marker for risk stratification of early CSCC in routine practice. Patients with tumor budding positive CSCC may benefit from evaluation and close follow-up for regional node metastasis.