Wound healing is essential to repair the skin after injury. In the epidermis, distinct stem cells (SCs) populations contribute to wound healing. However, how SCs balance proliferation, differentiation and migration to repair a wound remains poorly understood. Here, we show the cellular and molecular mechanisms that regulate wound healing in mouse tail epidermis. Using a combination of proliferation kinetics experiments and molecular profiling, we identify the gene signatures associated with proliferation, differentiation and migration in different regions surrounding the wound. Functional experiments show that SC proliferation, migration and differentiation can be uncoupled during wound healing. Lineage tracing and quantitative clonal analysis reveal that, following wounding, progenitors divide more rapidly, but conserve their homoeostatic mode of division, leading to their rapid depletion, whereas SCs become active, giving rise to new progenitors that expand and repair the wound. These results have important implications for tissue regeneration, acute and chronic wound disorders.