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The mammalian skin is a complex dynamic organ composed of thin multilayered epidermis and a thick underlying connective tissue layer dermis. The epidermis undergoes continuous renewal throughout life. The stems cells uniquely express particular surface markers utilized for their identification, isolation and localization in specific niches in epidermis as well as hair follicles (HFs). The two stage skin carcinogenesis model involves stepwise accumulation of genetic alterations and ultimately leading to malignancy. Whereas early research on skin carcinogenesis focused on the molecular nature of carcinogens and tumor promoters, more recent studies have focused on the identification of the target cells and tumor promoting cells for both chemical and physical carcinogens and promoters. Recent studies support the hypothesis that keratinocyte stem cells are the targets in skin carcinogenesis. In this review, we discuss briefly the localization of stem cells in the epidermis and HFs, and review the possibility that skin papillomas and carcinomas are derived from stem cells, as well as from other cells in the cutaneous epithelium whose stem cell properties are not well known. [ABSTRACT FROM AUTHOR]