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The hair follicle serves as a melanocyte reservoir for both hair and skin pigmentation. Melanocyte stem cells (MelSCs) and melanocyte progenitors reside in the bulge/sub-bulge region of the lower permanent portion of the hair follicle and play a vital role for repigmentation in vitiligo. It would be beneficial to isolate MelSCs in order to further study their function in pigmentary disorders; however, due to the lack of specific molecular surface markers, this has not yet been successfully accomplished in human hair follicles (HuHF). One potential method for MelSCs isolation is the “side population” technique, which is frequently used to isolate hematopoietic and tumor stem cells. In the present study, we decided to isolate HuHF MelSCs using “side population” to investigate their melanotic function. By analyzing mRNA expression of TYR, SOX10, and MITF, melanosome structure, and immunofluorescence with melanocyte-specific markers, we revealed that the SP-fraction contained MelSCs with an admixture of differentiated melanocytes. Furthermore, our in vivo studies indicated that differentiated SP-fraction cells, when fabricated into a cell-chitosan/gelatin composite, could transiently repopulate immunologically compromised mice skin to regain pigmentation. In summary, the SP technique is capable of isolating HuHF MelSCs that can potentially be used to repopulate skin for pigmentation.