Progenitor cells maintain self-renewing tissues throughout life by sustaining their capacity for proliferation while suppressing cell cycle exit and terminal differentiation. DNA methylation provides a potential epigenetic mechanism for the cellular memory needed to preserve the somatic progenitor state through repeated cell divisions. DNA methyltransferase 1 (DNMT1) maintains DNA methylation patterns after cellular replication. Although dispensable for embryonic stem cell maintenance, the role for DNMT1 in maintaining the progenitor state in constantly replenished somatic tissues, such as mammalian epidermis, is unclear. Here we show that DNMT1 is essential for epidermal progenitor cell function. DNMT1 protein was found enriched in undifferentiated cells, where it was required to retain proliferative stamina and suppress differentiation. In tissue, DNMT1 depletion led to exit from the progenitor cell compartment, premature differentiation and eventual tissue loss. Genome-wide analysis showed that a significant portion of epidermal differentiation gene promoters were methylated in self-renewing conditions but were subsequently demethylated during differentiation. Furthermore, UHRF1 (refs 9, 10), a component of the DNA methylation machinery that targets DNMT1 to hemi-methylated DNA, is also necessary to suppress premature differentiation and sustain proliferation. In contrast, Gadd45A and B, which promote active DNA demethylation, are required for full epidermal differentiation gene induction. These data demonstrate that proteins involved in the dynamic regulation of DNA methylation patterns are required for progenitor maintenance and self-renewal in mammalian somatic tissue.