The optimal source of stem cells for regenerative medicine is a major question. Embryonic stem (ES) cells have shown promise for pluripotency but have ethical issues and potential to form teratomas. Pluripotent stem cells have been produced from skin cells by either viral-, plasmid- or transposon-mediated gene transfer. These stem cells have been termed induced pluripotent stem cells or iPS cells. iPS cells may also have malignant potential and are inefficiently produced. Embryonic stem cells may not be suited for individualized therapy, since they can undergo immunologic rejection. To address these fundamental problems, our group is developing hair follicle pluripotent stem (hfPS) cells. Our previous studies have shown that mouse hfPS cells can differentiate to neurons, glial cells in vitro, and other cell types, and can promote nerve and spinal cord regeneration in vivo. hfPS cells are located above the hair follicle bulge in what we have termed the hfPS cell area (hfPSA) and are nestin positive and keratin 15 (K-15) negative. Human hfPS cells can also differentiate into neurons, glia, keratinocytes, smooth muscle cells, and melanocytes in vitro. In the present study, human hfPS cells were transplanted in the severed sciatic nerve of the mouse where they differentiated into glial fibrillary-acidic-protein (GFAP)-positive Schwann cells and promoted the recovery of pre-existing axons, leading to nerve generation. The regenerated nerve recovered function and, upon electrical stimulation, contracted the gastrocnemius muscle. The hfPS cells can be readily isolated from the human scalp, thereby providing an accessible, autologous and safe source of stem cells for regenerative medicine that have important advantages over ES or iPS cells. J. Cell. Biochem. 107: 1016–1020, 2009. © 2009 Wiley-Liss, Inc.