Stem cell (SC) exhaustion is a hallmark of aging. However, the process of SC depletion during aging has not been observed in live animals, and the underlying mechanism contributing to tissue deterioration remains obscure. We find that, in aged mice, epithelial cells escape from the hair follicle (HF) SC compartment to the dermis, contributing to HF miniaturization. Single-cell RNA-seq and assay for transposase-accessible chromatin using sequencing (ATAC-seq) reveal reduced expression of cell adhesion and extracellular matrix genes in aged HF-SCs, many of which are regulated by Foxc1 and Nfatc1. Deletion of Foxc1 and Nfatc1 recapitulates HF miniaturization and causes hair loss. Live imaging captures individual epithelial cells migrating away from the SC compartment and HF disintegration. This study illuminates a hitherto unknown activity of epithelial cells escaping from their niche as a mechanism underlying SC reduction and tissue degeneration. Identification of homeless epithelial cells in aged tissues provides a new perspective for understanding aging-associated diseases.