Runx1 controls hematopoietic stem cell emergence and hair follicle stem cell (HFSC) activation and proliferation in adult skin. Here we use lineage tracing and mouse genetic manipulation to address the role of Runx1 in the embryonic development of HFSCs. We find Runx1 is expressed in distinct classes of embryonic skin precursors for short-term HF progenitors, adult HFSCs, and mesenchymal progenitors. Runx1 acts in the embryonic epithelium for timely emergence of adult HFSCs and short-term progenitors, but is dispensable for both of them. In contrast, Runx1 is strictly needed in the embryonic mesenchyme for proper adult HFSC differentiation and long-term skin integrity. Our data implicate Runx1 in epithelial cell adhesion and migration and in regulation of paracrine epithelial-mesenchymal cross talk. The latter involves Lef1 and Wnt signaling modulation in opposing directions from two distinct skin compartments. Thus, a master regulator of hematopoiesis also controls HFSC emergence and maintenance via modulation of bidirectional cross talking between nascent stem cells and their niche.