Skin stem cells (SCs) are specified and rapidly expanded to fuel body growth during early development. However, the molecular mechanisms that govern the amplification of skin SCs remain unclear. Here we report an essential role for miR-205, one of the most highly expressed microRNAs in skin SCs, in promoting neonatal expansion of these cells. Unlike most mammalian miRNAs, genetic deletion of miR-205 causes neonatal lethality with severely compromised epidermal and hair follicle growth. In the miR-205 knockout skin SCs, phospho-Akt is significantly downregulated, and the SCs prematurely exit the cell cycle. In the hair follicle, this accelerates the transition of the neonatal SCs towards quiescence. We identify multiple miR-205-targeted negative regulators of PI(3)K signalling that mediate the repression of phospho-Akt and restrict the proliferation of SCs. Our findings reveal an essential role for miR-205 in maintaining the expansion of skin SCs by antagonizing negative regulators of PI(3)K signalling.