Epidermal stem cells are of major importance for skin regeneration and tissue engineering, but differentiated epidermal cells lost their proliferative capacity and are no longer able to regenerate a skin equivalent. Here, we investigated the role of β-catenin in regulating regenerative functions of differentiated epidermal cells. Lithium chloride and a highly specific glycogen synthase kinase (GSK)-3β inhibitor were applied to induce the expression of β-catenin in differentiated epidermal cells. After a 6-day induction, the large flat-shaped cells with a small nuclear-cytoplasmic ratio had changed into small round-shaped cells with a large nuclear-cytoplasmic ratio. Phenotypic assays showed a remarkably higher expression of CK19, β1-integrin, Oct4 and Nanog in induced cells than in the control group (p < 0.01). In addition, the results of growth and functional investigations demonstrated that the induced epidermal cells exhibited a high colony-forming ability, a long-term proliferative potential and the ability to regenerate a skin equivalent, which were regarded as the most important features of epidermal stem cells. These results suggest that the activation of β-catenin favors the reversion or dedifferentiation of differentiated epidermal cells to an immature or a less differentiated state. This study may also offer a new approach to yield enough epidermal stem cells for skin regeneration and tissue engineering.