The skin is a unique organ that contains a variety of stem cells for the maintenance of skin homeostasis and the repair of skin tissues following injury and disease. Skin-derived stem cells (SDSCs) constitute a heterogeneous population of stem cells generated in vitro from dermis, which can be cultured as spherical aggregates of cells in suspension culture. Under certain in vitro or in vivo conditions, SDSCs show multipotency and can generate a variety of neural, mesodermal, and endodermal cell types such as neurons, glia, fibroblasts, adipocytes, muscle cells, chondroblasts, osteoblats, and islet β-cell-like cells. SDSCs are likely derived from multipotent stem cells located in the hair follicles that are, in turn, derived from embryonic migratory neural crest or mesoderm cells. During the past decade, a wave of reports have shown that germ cells can be generated from various types of stem cells. It has been shown that SDSCs are able to produce primordial germ cell-like cells in vitro, and even oocyte-like cells (OLCs). Whether these germ cell-like cells (GCLCs) can give rise to viable progeny remains, however, unknown. In this review, we will discuss the origin and characteristics of SDSCs from which the GCLC are derived, the possible mechanisms of this differentiation process, and finally the prospective biomedical applications of the SDSC-derived GCLCs.