We describe here the isolation of stem cells from juvenile and adult rodent skin. These cells derive from the dermis, and clones of individual cells can proliferate and differentiate in culture to produce neurons, glia, smooth muscle cells and adipocytes. Similar precursors that produce neuron-specific proteins upon differentiation can be isolated from adult human scalp. Because these cells (termed SKPs for skin-derived precursors) generate both neural and mesodermal progeny, we propose that they represent a novel multipotent adult stem cell and suggest that skin may provide an accessible, autologous source of stem cells for transplantation.