Stem cell self renewal, maintenance and differentiation are influenced by the convergence of intrinsic cellular signals and extrinsic microenvironmental cues from the surrounding stem cell niche. However, the specific signals involved are often still poorly understood. This is also true for skin epithelial stem cells. Recently, by transcriptionally profiling of embryonic hair progenitors in mice, Rhee et al. have managed to define how murine hair follicle epithelial stem cells are specified and maintained in an undifferentiated state. These authors have identified Lhx2 as a transcription factor functionally positioned downstream of signals necessary to specify hair follicle stem cells such as p63 or NFkappaB, but upstream of signals like Wnt/beta-catenin, Bmp or Shh that are required to drive activated stem cells via the production of transient amplifying cells into terminal differentiation.