Abstract Even though many adult tissues undergo relatively infrequent turnover, they still require stem cells (SCs) which are then used sparingly to replenish cells during normal homeostasis. Moreover, in response to injury, adult SCs must be mobilized quickly to repair damaged tissue. How SCs balance their ability to rest during periods of quiescence, activate to replenish cells and tissue when needed and replace the SCs used for tissue maintenance and repair are fascinating topics in stem cell biology and tissue morphogenesis. Moreover, increasing evidence suggests that the regulatory circuitry governing this balancing act is at the root of some types of tumors both in mice and in humans. The skin is an excellent model system to understand how undifferentiated SCs self-renew to generate the epidermis and its notable appendages, hair follicles (HFs). In the embryo, skin begins as a single layer of multipotent progenitors, which adhere to each other as well as to an underlying basement membrane rich in extracellular matrix. These progenitors express members of the Lef1/Tcf family of DNA binding proteins thought to act as bipartite transcription factors in association with β-catenin. Excess β-catenin not utilized in intercellular junctions is stabilized when skin progenitors receive Wnt signals from their microenvironment to initiate HF formation. As development proceeds, progenitors respond to additional signals as the skin epithelial tissues mature and differentiate. Postnatally, epidermis retains SCs to undergo homeostasis and maintain the body surface barrier, while HFs undergo cyclical bouts of Wnt signaling that leads to follicle regeneration and hair growth, followed by destruction of the follicle and a resting period to accumulate a new threshold level of signal. The role of Wnt signaling in follicle SC activation and hair regeneration is particularly interesting, as mounting evidence suggests that Wnt signaling may play a general role in governing SC biology and injury repair. Using skin as our paradigm, we have continued to dissect how extrinsic signaling to SCs sets off a cascade of changes in transcription that govern the activation of SCs during tissue development, homeostasis and hair cycling. We've focused our efforts on the roles of three Tcf/Lef1 family members, all expressed initially in the single-layered epithelium, but which then diversify to be differentially expressed in adult skin SCs and rapidly dividing but committed progeny. Our findings point to Wnt-independent as well as Wnt-dependent functions for these transcription factors, which are likely to be important for our understanding of why Wnt signaling is deregulated in a variety of different human cancers and how Wnt circuitry balances quiescence and proliferation in stem cell and progenitor compartments. Citation Information: Cancer Res 2009;69(23 Suppl):IA-15.