Glucocorticoids are potent inhibitors of mouse skin tumorigenesis. The glucocorticoid control of cellular functions is mediated via the glucocorticoid receptor (GR), a well-known transcription factor. Recently, we generated transgenic mice overexpressing GR under control of the keratin5 (K5) promoter, and showed that K5.GR animals are resistant to skin carcinogenesis. Follicular epithelial stem cells (SCs), located in the bulge region of the hair follicle, are believed to be one of the target cells for skin carcinogenesis. We found that the number of putative hair follicle SC detected as label-retaining cells was significantly less in the K5.GR transgenics compared to wild type (w.t.) littermates. We also showed that GR overexpression led to a reduction in the clonogenicity of the follicular epithelial SCs. We evaluated the global effect of GR on gene expression in a population of follicular SC-enriched bulge keratinocytes isolated by fluorescence activated cell sorting. We found that GR affected the expression of numerous bulge SC 'signature' genes, genes involved in the maintenance of SC and progenitor cells of non-epidermal origin and proapoptotic genes. Our findings underscore the important role of GR signaling in the homeostasis of follicular epithelial SCs, and suggest that the reduction in their number may underlie the tumor suppressor effect of GR in the skin.