We previously made the surprising finding that cultures of multipotent precursors can be grown from the dermis of neonatal and adult mammalian skin. These skin-derived precursors (SKPs) display multi-lineage differentiation potential, producing both neural and mesodermal progeny in vitro, and are an apparently novel precursor cell type that is distinct from other known precursors within the skin. In this review, we begin by placing these findings within the context of the rapidly evolving stem cell field. We then describe our recent efforts focused on understanding the developmental biology of SKPs, discussing the idea that SKPs are neural crest-related precursors that (i) migrate into the skin during embryogenesis, (ii) persist within a specific dermal niche, and (iii) play a key role in the normal physiology, and potentially pathology, of the skin. We conclude by highlighting some of the therapeutic implications and unresolved questions raised by these studies.