The epidermis is populated by stem cells that produce daughters that differentiate to form the interfollicular epidermis, hair follicles and sebaceous glands. Diffusible factors, cell–cell contact and extracellular matrix proteins are all important components of the microenvironment of individual stem cells and profoundly affect the differentiation pathways selected by their progeny. Here, we summarize what is known about stem-cell populations and lineage relationships within the epidermis. We also present evidence that postnatal epidermis can be reprogrammed, altering the number and location of cells that differentiate along specific epidermal lineages.