The bulge region of the hair follicle serves as a repository for epithelial stem cells that can regenerate the follicle in each hair growth cycle and contribute to epidermis regeneration upon injury. Here we describe a population of multipotential stem cells in the hair follicle bulge region; these cells can be identified by fluorescence in transgenic nestin-GFP mice. The morphological features of these cells suggest that they maintain close associations with each other and with the surrounding niche. Upon explantation, these cells can give rise to neurosphere-like structures in vitro. When these cells are permitted to differentiate, they produce several cell types, including cells with neuronal, astrocytic, oligodendrocytic, smooth muscle, adipocytic, and other phenotypes. Furthermore, upon implantation into the developing nervous system of chick, these cells generate neuronal cells in vivo. We used transcriptional profiling to assess the relationship between these cells and embryonic and postnatal neural stem cells and to compare them with other stem cell populations of the bulge. Our results show that nestin-expressing cells in the bulge region of the hair follicle have stem cell-like properties, are multipotent, and can effectively generate cells of neural lineage in vitro and in vivo.