Current therapies for treating heterogeneous cancers such as head and neck squamous cell carcinoma (HNSCC) are non-selective and are administered independent of response biomarkers. Therapy resistance subsequently emerges, resulting in increased cellular proliferation that is associated with loss of differentiation. Whether a cancer cell differentiation potential can dictate therapy responsiveness is still currently unknown. A multi-omic approach integrating whole-genome and whole-transcriptome sequencing with drug sensitivity was employed in a HNSCC mouse model, primary patients’ data, and human cell lines to assess the potential of functional differentiation in predicting therapy response. Interestingly, a subset of HNSCC with effective GRHL3-dependent differentiation was the most sensitive to inhibitors of PI3K/mTOR, c-Myc, and STAT3 signaling. Furthermore, we identified the GRHL3-differentiation target gene Filaggrin (FLG) as a response biomarker and more importantly, stratified HNSCC subsets as treatment resistant based on their FLG mutational profile. The loss of FLG in sensitive HNSCC resulted in a dramatic resistance to targeted therapies while the GRHL3-FLG signature predicted a favorable patient prognosis. This study provides evidence for a functional GRHL3-FLG tumor-specific differentiation axis that regulates targeted therapy response in HNSCC and establishes a rationale for clinical investigation of differentiation-paired targeted therapy in heterogeneous cancers.