Background: Prurigo nodularis (PN) is an intensely pruritic, inflammatory skin disease with a poorly understood pathogenesis. Methods: We performed single-cell transcriptomic profiling of 28,695 lesional and non-lesional PN cells. Results: Lesional PN has increased dysregulated fibroblasts (FBs) and myofibroblasts. FBs in lesional PN were shifted towards a cancer-associated fibroblast (CAF)-like phenotype, with POSTN+WNT5A+ CAFs increased in PN, and similarly so in squamous cell carcinoma. A multi-center cohort study revealed an increased risk of SCC and CAF-associated malignancies (breast and colorectal) in PN patients. Systemic fibroproliferative diseases (renal sclerosis and idiopathic pulmonary fibrosis) were upregulated in PN patients. Ligand receptor analyses demonstrated a fibroblast neuronal axis with FB-derived WNT5A and periostin interactions with neuronal receptors MCAM and ITGAV. Compared to atopic dermatitis and psoriasis, mesenchymal dysregulation is unique to PN with an intermediate Th2/Th17 phenotype. Conclusion: These findings identify a pathogenic and targetable POSTN+WNT5A+ fibroblast subpopulation that may predispose CAF-associated malignancies in PN patients.