Activation of Myc (c-Myc) causes epidermal cells to exit the stem cell compartment and differentiate into sebocytes and interfollicular epidermis at the expense of the hair lineages. To investigate how Myc exerts these effects we analysed the transcription of more than 10000 genes following Myc activation in the basal layer of mouse epidermis for 1 or 4 days. The major classes of induced genes were involved in synthesis and processing of RNA and proteins, in cell proliferation and in differentiation. More than 40% of the downregulated genes encoded cell adhesion and cytoskeleton proteins. Repression of these genes resulted in profound changes in the adhesive and motile behaviour of keratinocytes. Myc activation inhibited cell motility and wound healing, correlating with decreased expression of a large number of extracellular matrix proteins. Cell adhesion and spreading were also impaired, and this correlated with decreased expression of the alpha6beta4 integrin, decreased formation of hemidesmosomes and decreased assembly of the actomyosin cytoskeleton. We propose that Myc stimulates exit from the stem cell compartment by reducing adhesive interactions with the local microenvironment or niche, and that the failure of hair differentiation reflects an inability of keratinocytes to migrate along the outer root sheath to receive hair inductive stimuli.