Hair is maintained through a cyclic process that includes periodic regeneration of hair follicles in a stem cell-dependent manner. Little is known, however, about the cellular and molecular mechanisms that regulate the layered differentiation of the hair follicle. We have established a mutant mouse with a cyclic alopecia phenotype resulting from the targeted disruption of Sox21, a gene that encodes a HMG-box protein. These mice exhibit progressive hair loss after morphogenesis of the first hair follicle and become completely nude in appearance, but then show hair regrowth. Sox21 is expressed in the cuticle layer and the progenitor cells of the hair shaft in both mouse and human. The lack of this gene results in a loss of the interlocking structures required for anchoring the hair shaft in the hair follicle. Furthermore, the expression of genes encoding the keratins and keratin binding proteins in the hair shaft cuticle are also specifically down-regulated in the Sox21-null mouse. These results indicate that Sox21 is a master regulator of hair shaft cuticle differentiation and shed light on the possible causes of human hair disorders.