Amniotic epithelial stem cells (AESCs) are considered as potential alternatives to keratinocytes (KCs) in tissue-engineered skin substitutes used for treating skin damage. However, their clinical application is limited since similarities and distinctions between AESCs and KCs remain unclear. Herein, a transcriptomics analysis and functional evaluation were used to understand the commonalities and differences between AESCs and KCs. RNA-sequencing revealed that AESCs are involved in multiple epidermis-associated biological processes shared by KCs and show more similarity to early stage immature KCs than to adult KCs. However, AESCs were observed to be heterogeneous, and some possessed hybrid mesenchymal and epithelial features distinct from KCs. A functional evaluation revealed that AESCs can phagocytose melanosomes transported by melanocytes in both 2D and 3D co-culture systems similar to KCs, which may help reconstitute pigmented skin. The overexpression of TP63 and activation of NOTCH signaling could promote AESC stemness and improve their differentiation features, respectively, bridging the gap between AESCs and KCs. These changes induced the convergence of AESC cell fate with KCs. In future, modified reprogramming strategies, such as the use of small molecules, may facilitate the further modulation human AESCs for use in skin regeneration.