SUMMARYMicroRNAs (miRNAs) play important roles in differentiation of stem cells. However, the precise dynamics of miRNA induction during stem cell differentiation have not been visualized and molecular mechanisms through which miRNAs execute their function remain unclear. Using high-resolution in situ hybridization together with cell lineage and proliferation markers in mouse skin, we show that miR-203 is transcriptionally activated in the differentiating daughter cells upon the asymmetric cell division of interfollicular progenitor cells. Once induced, miR-203 rapidly promotes the cell cycle exit within 6 hours and abolishes self-renewal of the progenitor cells. With an inducible mouse model, we identify numerous miR-203 in vivo targets that are highly enriched in regulation of cell cycle and cell division, as well as in response to DNA damage. Importantly, co-suppression of individual targets, including p63, Skp2 and Msi2 by miR-203 is required for its function of promoting the cell cycle exit and inhibiting the long-term proliferation. Together, our findings reveal the rapid and widespread impact of miR-203 on the self-renewal program and provide mechanistic insights into the potent role of miR-203 during the epidermal differentiation. These results should also contribute to understanding the role of miR-203 in the development of skin cancer.