Epidermal stem cells residing in different locations in the skin continuously self-renew and differentiate into distinct cell lineages to maintain skin homeostasis during postnatal life. Murine epidermal stem cells located at the bulge region are responsible for replenishing the hair lineage, while the stem cells at the isthmus regenerate interfollicular epidermis and sebaceous glands. In vitro cell culture and In vivo animal studies have implicated TGF-β signaling in the maintenance of epidermal and hair cycle homeostasis. Here, we employed a triple transgenic animal model that utilizes a combined Cre/loxP and rtTA/TRE system to allow inducible and reversible inhibition of TGF-β signaling in hair follicle lineages and suprabasal layer of the epidermis. Using this animal model, we have analyzed the role of TGF-β signaling in distinct phases of the hair cycle. Transient abrogation of TGF-β signaling does not prevent catagen progression; however, it induces aberrant proliferation and differentiation of isthmus stem cells to epidermis and sebocyte lineages and a blockade in anagen re-entry as well as results in an incomplete hair shaft development. Moreover, ablation of TGF-β signaling during anagen leads to increased apoptosis in the secondary hair germ and bulb matrix cells. Blocking of TGF-β signaling in bulge stem cell cultures abolishes their colony-forming ability, suggesting that TGF-β signaling is required for the maintenance of bulge stem cells. At the molecular level, inhibition of TGF-β signaling results in a decrease in both Lrig1-expressing isthmus stem cells and Lrg5-expressing bulge stem cells, which may account for the phenotypes seen in our animal model. These data strongly suggest that TGF-β signaling plays an important role in regulating the proliferation, differentiation, and apoptosis of distinct epithelial stem cell populations in hair follicles.