Chronic inflammation is associated with a variety of pathological conditions in epithelial tissues, including cancer, metaplasia and aberrant wound healing. In relation to this, a significant body of evidence suggests that aberration of epithelial stem and progenitor cell function is a contributing factor in inflammation-related disease, although the underlying cellular and molecular mechanisms remain to be fully elucidated. In this study, we have delineated the effect of chronic inflammation on epithelial stem/progenitor cells using the corneal epithelium as a model tissue. Using a combination of mouse genetics, pharmacological approaches and in vitro assays, we demonstrate that chronic inflammation elicits aberrant mechanotransduction in the regenerating corneal epithelium. As a consequence, a YAP–TAZ/β-catenin cascade is triggered, resulting in the induction of epidermal differentiation on the ocular surface. Collectively, the results of this study demonstrate that chronic inflammation and mechanotransduction are linked and act to elicit pathological responses in regenerating epithelia.