In mammalian skin, multiple types of resident cells are required to create a functional tissue and support tissue homeostasis and regeneration. The cells that compose the epithelial stem cell niche for skin homeostasis and regeneration are not well defined. Here, we identify adipose precursor cells within the skin and demonstrate that their dynamic regeneration parallels the activation of skin stem cells. Functional analysis of adipocyte lineage cells in mice with defects in adipogenesis and in transplantation experiments revealed that intradermal adipocyte lineage cells are necessary and sufficient to drive follicular stem cell activation. Furthermore, we implicate PDGF expression by immature adipocyte cells in the regulation of follicular stem cell activity. These data highlight adipogenic cells as skin niche cells that positively regulate skin stem cell activity, and suggest that adipocyte lineage cells may alter epithelial stem cell function clinically.