Using conditional gene targeting in mice, we show that the chromatin remodeler Mi-2beta is crucial for different aspects of skin development. Early (E10.5) depletion of Mi-2beta in the developing ventral epidermis results in the delayed reduction of its suprabasal layers in late embryogenesis and to the ultimate depletion of its basal layer. Later (E13.5) loss of Mi-2beta in the dorsal epidermis does not interfere with suprabasal layer differentiation or maintenance of the basal layer, but induction of hair follicles is blocked. After initiation of the follicle, some subsequent morphogenesis of the hair peg may proceed in the absence of Mi-2beta, but production of the progenitors that give rise to the inner layers of the hair follicle and hair shaft is impaired. These results suggest that the extended self-renewal capacity of epidermal precursors arises early during embryogenesis by a process that is critically dependent on Mi-2beta. Once this process is complete, Mi-2beta is apparently dispensable for the maintenance of established repopulating epidermal stem cells and for the differentiation of their progeny into interfollicular epidermis for the remainder of gestation. Mi-2beta is however essential for the reprogramming of basal cells to the follicular and, subsequently, hair matrix fates.