The epidermis is a self-renewing tissue which regenerates constantly. It consists mainly of keratinocytes of various degree of differentiation, from the proliferative basal layer to the terminally differentiated horny layer. Keratinocytes are specialized cells responsible for cohesion, barrier functions, and immunological reactions. The maintenance of homeostasis in the epidermis is possible via the self-renewing ability of the epidermal stem-cell population, which gives rise to differentiated keratinocytes. It is believed that epidermal stem cells play an important role in cellular regeneration, wound healing, and the pathogenesis of skin cancers. Epidermal stem cells reside in the basal layer of the epidermis, the bulge region of the hair follicle, and the germinal hair follicle matrix. Epidermal stem cells are relatively quiescent, slow-cycling cells defined by their great proliferative potential and unlimited capacity for self-renewal. Adult human epidermal stem cells can be activated and expanded in vitro under appropriate conditions. Cultured human keratinocytes and epidermal stem cells may be then transplanted as a biological dressing in burn injuries, chronic wounds, and various skin diseases. Additionally, epidermal stem cells have become a target for gene therapy and drug testing. In this review the fundamental characteristics of epidermal stem cells and the signaling pathways involved in the regulation of their proliferation and differentiation are discussed. The possibilities of using epidermal stem cells in medicine are also presented.