The increasing use of the hair follicle as a stem cell paradigm is due in part to the complex interplay between epithelial, dermal and other cell types, each with interesting differentiation potential and prospective therapeutic applications. This review focuses on research into the environmental niche, gene expression profiles and plasticity of hair follicle stem cell populations, where many recent advances have come about through novel technological and experimental approaches. We discuss major developmental pathways involved in the establishment and control of the epithelial stem cell niche, and evidence of plasticity between stem and transit amplifying cell populations.