Human pluripotent stem cells, under the right conditions, can be engineered to generate populations of any somatic cell type. Knowledge of what mechanisms govern differentiation towards a particular lineage is often quite useful for efficiently producing somatic cell populations from hPSCs. Here, we have outlined a strategy for deriving populations of simple epithelial cells, as well as more mature epidermal keratinocyte progenitors, from hPSCs by exploiting a mechanism previously shown to direct epithelial differentiation of hPSCs. Specifically, we describe how to direct epithelial differentiation of hPSCs using a Src family kinase inhibitor, SU6656, which has been shown to modulate β-catenin translocation to the cell membrane and thus promote epithelial differentiation. The differentiation platform outlined here produces cells with the ability to terminally differentiate to epidermal keratinocytes in culture through a stable simple epithelial cell intermediate that can be expanded in culture for numerous (>10) passages.