In hair follicles, dermal papilla (DP) and dermal sheath (DS) cells exhibit striking levels of plasticity, as each can regenerate both cell types. Here, we show that thrombin induces a phosphoinositide 3-kinase (PI3K)-Akt pathway-dependent acquisition of DS-like properties by DP cells in vitro, involving increased proliferation rate, acquisition of `myofibroblastic' contractile properties and a decreased capacity to sustain growth and survival of keratinocytes. The thrombin inhibitor protease nexin 1 [PN-1, also known as SERPINE2) regulates all those effects in vitro. Accordingly, the PI3K-Akt pathway is constitutively activated and expression of myofibroblastic marker smooth-muscle actin is enhanced in vivo in hair follicle dermal cells from PN-1–/– mice. Furthermore, physiological PN-1 disappearance and upregulation of the thrombin receptor PAR-1 (also known as F2R) during follicular regression in wild-type mice also correlate with such changes in DP cell characteristics. Our results indicate that control of thrombin signaling interferes with hair follicle dermal cells plasticity to regulate their function.