Skin-derived precursors (SKPs) are an attractive stem cell model for cell-based therapies. SKPs can be readily generated from embryonic and adult mice and adult humans, exhibit a high degree of multipotency, and have the potential to serve as a patient autologous stem cell. The advancement of these cells toward therapeutic use depends on the ability to control precisely the self-renewal and differentiation of SKPs. Here we show that two well-known stem cell factors, Foxd3 and Sox2, are critical regulators of the stem cell properties of SKPs. Deletion of Foxd3 completely abolishes the sphere-forming potential of these cells. In the absence of Sox2, SKP spheres can be formed, but with reduced size and frequency. Our results provide entry points into the gene regulatory networks dictating SKP behavior, and pave the way for future studies on a therapeutically relevant stem cell.