Current understanding of the biology of epidermal stem cells opens a totally new perspective in the function of the epidermis and adjacent epithelial structures. A number of pathogenetic as well as clinical-therapeutic approaches against a variety of dermatoses may become possible with knowledge about keratinocyte proliferation, differentiation and regeneration. The reservoir of epidermal stem cells is located in the interfollicular epidermis, the hair follicle area and the germinal hair follicle matrix. Endogenous stem cell clones exist here, giving rise to transient amplifying cells and postmitotic cells. The stem cell clones are organized in clusters and display high expression of adhesion proteins, which guarantee their stability in a specific environment consisting of different cell types and extracellular substrates in the stratum basale. Differentiation is determined by a specific cascade of chemical signals from the stem cell environment and from the genetic program of the cell. The clinical relevance of stem cells lies primarily in their therapeutic potential with reconstruction of epithelia by reimplantation of autologous stem cells or gene therapeutic applications such as targeted transfection. However, the benefit-to-risk ratio cannot yet be accurately estimated.