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 β₁ 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.