The development of dermal equivalents (DEs) for the treatment of burns has contributed toward efficient wound closure. A collagen-glycosaminoglycan DE (C-GAG) grafted with hair follicles converted a full-thickness wound to partial-thickness resulting in complete wound closure and restored hair. In this study we compared the ability of both intact pilosebaceous units (PSU) or truncated hair follicles (THF) to regenerate a multilayered epidermis in vitro when implanted into de-epidermalized dermis (DED) or C-GAG with the epidermis generated in vivo using C-CAG. Keratinocytes explanted from the outer root sheath of PSU and THF in both DED and C-GAG but only formed a multilayered epidermis with PSU in DED. PSU were more effective at forming multilayered epidermis in DED than THF. Both DED and C-GAG skin expressed proliferation (PCNA), differentiation (K1, K10), hyperproliferation (K6, K16), basal (K14), putative stem cell (p63), extracellular matrix protein (Collagen IV), mesenchymal (vimentin) and adherens junction (β-catenin) markers. These data suggest DEs supported initial maintenance of the implanted hair follicles, in particular PSU, and provide an excellent model with which to investigate the regulation of hair follicle progenitor epithelial cells during epidermal regeneration. Although neither PSU nor THF formed multilayered epidermis in C-CAG in vitro, hair follicles implanted into engrafted C-GAG on a burns patient resulted in epithelial regeneration and expression of proliferation and differentiation markers in a similar manner to that seen in vitro. However, the failure of C-GAG to support epidermal regeneration in vitro suggests in vivo factors are essential for full epidermal regeneration using C-GAG.