Epidermis contains a compartment of stem cells but currently there is no common ctiterion to recognize individual stem cells with any confidence. Epidermis appears to contain stem cells of different levels of maturity and it is very likely that the main repository of epidrmal stem cells is located in the hair follicle from which cells can emigrate into epidermis and also give rise to follicular and sebaceous keratinocytes. Epidermis consists of proliferative units containing stem and transit-amplifying cells, but the exact size of a proliferative unit cannot be measured accurately. The available data suggest that populations of stem and transit-amplifying cells are not discrete but represent a continuum from cells with a high self-renewal capacity and a low probability of differentiation to those with low self-renewal capacities and high commitments to differentiation. Stem cells occupy a special niche that provides a microenvironment, including an adhesion of stem cells to the basal membrane and their paracrine interactions with neighbour epidermal and mesenchymal cells. The fate of an epidermal stem cell depends on its prehistory and microenvironment.