The hair follicle bulge area is an abundant, easily accessible source of actively growing, pluripotent adult stem cells. Nestin, a protein marker for neural stem cells, also is expressed in follicle stem cells and their immediate, differentiated progeny. The fluorescent protein GFP, whose expression is driven by the nestin regulatory element in transgenic mice, served to mark the follicle cell fate. The pluripotent nestin-driven GFP stem cells are positive for the stem cell marker CD34 but negative for keratinocyte marker keratin 15, suggesting their relatively undifferentiated state. These cells can differentiate into neurons, glia, keratinocytes, smooth muscle cells, and melanocytes in vitro. In vivo studies show the nestin-driven GFP hair follicle stem cells can differentiate into blood vessels and neural tissue after transplantation to the subcutis of nude mice. Equivalent hair follicle stem cells derived from transgenic mice with β-actin-driven GFP implanted into the gap region of a severed sciatic nerve greatly enhance the rate of nerve regeneration and the restoration of nerve function. The follicle cells transdifferentiate largely into Schwann cells, which are known to support neuron regrowth. Function of the rejoined sciatic nerve was measured by contraction of the gastrocnemius muscle upon electrical stimulation. After severing the tibial nerve and subsequent transplantation of hair follicle stem cells, walking print length and intermediate toe spread significantly recovered, indicating that the transplanted mice recovered the ability to walk normally. These results suggest that hair follicle stem cells provide an important, accessible, autologous source of adult stem cells for regenerative medicine.