AbstractNew molecular markers for epidermal stem cells have enabled their isolation both in vitro and from the epidermis lying between hair follicles. Micro‐dissection experiments have localised a second population of stem cells within hair follicles. Epidermal stem cells have a patterned distribution in vivo. The patterning can be reconstituted in vitro, showing that it is generated by interactions between keratinocytes and that the differentiation of epidermal stem cells is regulated by signals from other keratinocytes. Recent evidence from transgenic mice suggests that stem cell behaviour in the gut may be regulated by similar cell‐cell interactions in vivo. Candidate genes for mediating these interactions are the homologues of Drosophila cell fate patterning genes such as Notch and Wingless and the Cadherin family of cell‐cell adhesion molecules. The roles of stem cells and of mutations of the Patched gene in epithelial carcinogenesis are discussed.