How stem cells give rise to epidermis is unclear despite the crucial role the epidermis plays in barrier and appendage formation. Here we use single cell-RNA sequencing to interrogate basal stem cell heterogeneity of human interfollicular epidermis and find four spatially distinct stem cell populations at the top and bottom of rete ridges and transitional positions between the basal and suprabasal epidermal layers. Cell-cell communication modeling suggests that basal cell populations serve as crucial signaling hubs to maintain epidermal communication. Combining pseudotime, RNA velocity, and cellular entropy analyses point to a hierarchical differentiation lineage supporting multi-stem cell interfollicular epidermal homeostasis models and suggest that transitional basal stem cells are stable states essential for proper stratification. Finally, alterations in differentially expressed transitional basal stem cell genes result in severe thinning of human skin equivalents, validating their essential role in epidermal homeostasis and reinforcing the critical nature of basal stem cell heterogeneity.