Keratoacanthoma (KA) is a common keratinocyte neoplasm that is regularly classified as a type of cutaneous squamous cell carcinoma (cSCC) despite demonstrating benign behavior. Differentiating KA from well-differentiated cSCC is difficult in many cases due to the substantial overlap of clinical and histological features. Currently, no reliable discriminating markers have been defined, and consequently, KAs are often treated similarly to cSCC, creating unnecessary surgical morbidity and healthcare costs. In this study, we used RNA sequencing to identify key differences in transcriptomes between KA and cSCC, which suggested divergent keratinocyte populations between each tumor. Imaging mass cytometry was then used to identify single-cell tissue characteristics, including cellular phenotype, frequency, topography, functional status, and interactions between KA and well-differentiated cSCC. We found that cSCC had significantly increased proportions of Ki67+ keratinocytes among tumor keratinocytes, which were dispersed significantly throughout non-basal keratinocyte communities. In cSCC, regulatory T-cells were more prevalent and held greater suppressive capacity. Furthermore, cSCC regulatory T-cells, tumor-associated macrophages, and fibroblasts had significant associations with Ki67+ keratinocytes as opposed to avoidances with KA, indicating a more immunosuppressive environment. Our data suggest that multicellular spatial features can serve as a foundation to enhance the histological discrimination of ambiguous KA and cSCC lesions.