A major area of research in regenerative medicine is the potential application of stem cells in skin grafting and tissue engineering. This would require well defined and efficient protocols for directing the commitment and differentiation of stem cells into the keratinocyte lineage, together with their selective purification and proliferation in vitro. The development of such protocols would reduce the likelihood of spontaneous differentiation of stem cells into divergent lineages upon transplantation, as well as reduce the risk of teratoma formation in the case of embryonic stem cells. Additionally, such protocols could provide useful in vitro models for studying skin tissue biology, as well as facilitate the genetic manipulation of stem cells for therapeutic applications. The development of pharmacokinetic and cytotoxicity/genotoxicity screening tests for skin-related biomaterials and drugs could also utilize protocols developed for the commitment and differentiation of stem cells into the keratinocyte lineage. Hence, this review critically examines the various strategies that could be employed to direct the commitment and differentiation of stem cells into the keratinocyte lineage in vitro.