Results of recent studies have indicated that bone marrow cells can differentiate into various cells of ectodermal, mesodermal, and endodermal origins when transplanted into the body. However, the problems associated with those experiments such as the long latent period, rareness of the event, and difficulty in controlling the processes have hampered detailed mechanistic studies. In the present study, we examined the potency of mouse bone marrow cells to differentiate into cells comprising skin tissues using a skin reconstitution assay. Bone marrow cells from adult green fluorescent protein (GFP)-transgenic mice were transplanted in a mixture of embryonic mouse skin cells (17.5 days post-coitus) onto skin defects made on the backs of nude mice. Within 3 weeks, fully differentiated skin with hair was reconstituted. GFP-positive cells were found in the epidermis, hair follicles, sebaceous glands, and dermis. The localization and morphology of the cells, results of immunohistochemistry, and results of specific staining confirmed that the bone marrow cells had differentiated into epidermal keratinocytes, sebaceous gland cells, follicular epithelial cells, dendritic cells, and endothelial cells under the present conditions. These results indicate that this system is suitable for molecular and cellular mechanistic studies on differentiation of stem cells to various epidermal and dermal cells.