Corneal epithelium is traditionally thought to be a self-sufficient, self-renewing tissue implying that its stem cells are located in its basal cell layer. Recent studies indicate however that corneal epithelial stem cells reside in the basal layer of peripheral cornea in the limbal zone, and that corneal and conjunctival epithelia represent distinct cell lineages. These ideas are supported by the unique limbal/corneal expression pattern of the K3 keratin marker for corneal-type differentiation; the restriction of the slow-cycling (label-retaining) cells in the limbus; the distinct keratin expression patterns of corneal and conjunctival epithelial cells even when they are provided with identical in vivo and in vitro growth environments; and the limbal cells' superior ability as compared with central corneal epithelial cells in undergoing in vitro proliferation and in reconstituting in vivo an intact corneal epithelium. The realization that corneal epithelial stem cells reside in the limbal zone provides explanations for several paradoxical properties of corneal epithelium including its 'mature-looking' basal cells, the preponderance of tumor formation in the limbal zone, and the centripetal cellular migration. The limbal stem cell concept has led to a better understanding of the strategies of corneal epithelial repair, to a new classification of various anterior surface epithelial diseases, to the use of limbal stem cells for the reconstruction of corneal epithelium damaged or lost as a consequence of trauma or disease ('limbal stem cell transplantation'), and to the rejection of the traditional notion of 'conjunctival transdifferentiation'. The fact that corneal epithelial stem cells reside outside of the cornea proper suggests that studying corneal epithelium per se without taking into account its limbal zone will yield partial pictures. Future studies need to address the signals that constitute the limbal stem cell niche, the mechanism by which amniotic membrane facilitates limbal stem cell transplantation and ex vivo expansion, and the lineage flexibility of limbal stem cells.