The epidermis contains two types of proliferative keratinocyte: stem cells, with unlimited self-renewal capacity, and transit amplifying cells, those daughters of stem cells that are destined to withdraw from the cell cycle and terminally differentiate after a few rounds of division. In a search for factors that regulate exit from the stem cell compartment, we constitutively expressed c-Myc in primary human keratinocytes by use of wild-type and steroid-activatable constructs. In contrast to its role in other cell types, activation of c-Myc in keratinocytes caused a progressive reduction in growth rate, without inducing apoptosis, and a marked stimulation of terminal differentiation. Keratinocytes can be enriched for stem or transit amplifying cells on the basis of beta1 integrin expression and by use of this method to fractionate cells prior to c-Myc activation, we found that c-Myc acted selectively on stem cells, driving them into the transit amplifying compartment. As a result, activation of c-Myc in epidermis reconstituted on a dermal equivalent led to premature execution of the differentiation program. The transcriptional regulatory domain of c-Myc was required for these effects because a deletion within that domain acted as a dominant-negative mutation. Our results reveal a novel biological role for c-Myc and provide new insights into the mechanism regulating epidermal stem cell fate.