The formation of the hair follicle and its cyclical growth, quiescence, and regeneration depend on reciprocal signaling between its epidermal and dermal components. The dermal organizing center, the dermal papilla (DP), regulates development of the epidermal follicle and is dependent on signals from the epidermis for its development and maintenance. GFP specifically expressed in DP cells of a transgenic mouse was used to purify this population and study the signals required to maintain it. We demonstrate that specific Wnts, but not Sonic hedgehog (Shh), maintain anagen-phase gene expression in vitro and hair inductive activity in a skin reconstitution assay.