The epidermis and its appendages develop from a single layer of multipotent embryonic progenitor keratinocytes. Embryonic stem cells receive cues from their environment that instruct them to commit to a particular differentiation programme and generate a stratified epidermis, hair follicles or sebaceous glands. Exciting recent developments have focused on how adult skin epithelia maintain populations of stem cells for use in the natural cycles of hair follicle regeneration and for re-epithelialization in response to wounding.