It is well established that tissue repair depends on stem cells and that chronic wounds predispose to tumour formation. However, the association between stem cells, wound healing and cancer is poorly understood. Lineage tracing has now shown how stem cells are mobilized to repair skin wounds and how they contribute to skin tumour development. The signalling pathways, including WNT and Hedgehog, that control stem cell behaviour during wound healing are also implicated in tumour formation. Furthermore, tumorigenesis and wound repair both depend on communication between epithelial cells, mesenchymal cells and bone marrow-derived cells. These studies suggest ways to harness stem cells for wound repair while minimizing cancer risk.