The proliferation of keratinocytes in the hair follicle varies from slowly cycling, intermittently proliferating stem cells in the bulge to rapidly proliferating, transient cells in the bulb. To better understand the biological differences between these two compartments, we sought to identify differentially expressed genes using cDNA macroarray analysis. Cyclin D1 was one of 13 genes increased in the bulge compared to the bulb, and its differential expression was corroborated by quantitative real-time polymerase chain reaction (PCR) on the original samples. Using immunohistochemical staining, laser-capture microdissection (LCM) and quantitative real-time PCR, we localized cyclin D1 to the suprabasal cells of the telogen bulge and anagen outer root sheath (ORS). Surprisingly, cyclin D1, D2, and D3 were not detectable by immunohistochemistry in the rapidly proliferating hair-producing cells of the anagen bulb (matrix cells), while these cells were strongly positive for Ki-67 and retinoblastoma protein. In contrast, pilomatricoma, a tumor thought to be derived from matrix cells, was positive for cyclin D1, D2, and D3. Our results suggest that cyclin D1 may mediate the proliferation of stem cells in the bulge to more differentiated transient amplifying cells in the suprabasal ORS. In contrast, non-cyclin D1-proteins appear to control cell division of the highly proliferative bulb matrix cells. This non-cyclin D1-mediated proliferation may provide a protective mechanism against tumorigenesis, which is overridden in pilomatricomas. Our data also demonstrate that the combination of DNA macroarray, LCM and quantitative real-time PCR is a powerful approach for the study of gene expression in defined cell populations with limited starting material.