The mechanistic basis by which the level of p27 expression influences tumor aggressiveness and patient mortality remains unclear. To elucidate the competing tumor-suppressing and oncogenic effects of p27 on gene expression in tumors, we analyzed the transcriptomes of squamous cell papilloma derived from nullizygous, heterozygous, and wild-type mice. We developed a novel functional pathway analysis method capable of testing directional and nonmonotonic dose response. This analysis can reveal potential causal relationships that might have been missed by other nondirectional pathway analysis methods. Applying this method to capture dose-response curves in papilloma gene expression data, we show that several known cancer pathways are dominated by low-high-low gene expression responses to increasing p27 gene doses. The oncogene cyclin D1, whose expression is elevated at an intermediate p27 dose, is the most responsive gene shared by these cancer pathways. Therefore, intermediate levels of p27 may promote cellular processes favoring tumorigenesis-strikingly consistent with the dominance of heterozygous mutations in seen in human cancers. Our findings shed new light on regulatory mechanisms for both pro- and anti-tumorigenic roles of p27. Functional pathway dose-response analysis provides a unique opportunity to uncover nonmonotonic patterns in biological systems.