Activation of Wnt/β-catenin signaling in adult mouse epidermis leads to expansion of the stem cell compartment and redirects keratinocytes in the interfollicular epidermis and sebaceous glands (SGs) to differentiate along the hair follicle (HF) lineages. Here we demonstrate that during epidermal development and homeostasis there is reciprocal activation of the androgen receptor (AR) and β-catenin in cells of the HF bulb. AR activation reduced β-catenin-dependent transcription, blocked β-catenin-induced induction of HF growth, and prevented β-catenin-mediated conversion of SGs into HFs. Conversely, AR inhibition enhanced the effects of β-catenin activation, promoting HF proliferation and differentiation, culminating in the formation of benign HF tumors and a complete loss of SG identity. We conclude that AR signaling has a key role in epidermal stem cell fate selection by modulating responses to β-catenin in adult mouse skin.