Mammalian epidermis is maintained by self-renewal of stem cells, but the underlying mechanisms are unknown. Deletion of Rac1, a Rho guanosine triphosphatase, in adult mouse epidermis stimulated stem cells to divide and undergo terminal differentiation, leading to failure to maintain the interfollicular epidermis, hair follicles, and sebaceous glands. Rac1 exerts its effects in the epidermis by negatively regulating c-Myc through p21-activated kinase 2 (PAK2) phosphorylation. We conclude that a pleiotropic regulator of cell adhesion and the cytoskeleton plays a critical role in controlling exit from the stem cell niche and propose that Rac and Myc represent a global stem cell regulatory axis.