Here, we provide the first study of prolactin (PRL) and prolactin receptor (PRLR) expression during the nonseasonal murine hair cycle, which is, in contrast to sheep, comparable with the human scalp and report that both PRL and PRLR are stringently restricted to the hair follicle epithelium and are strongly hair cycle-dependent. In addition we show that PRL exerts functional effects on anagen hair follicles in murine skin organ culture by down-regulation of proliferation in follicular keratinocytes. In telogen follicles, PRL-like immunoreactivity was detected in outer root sheath (ORS) keratinocytes. During early anagen (III to IV), the developing inner root sheath (IRS) and the surrounding ORS were positive for PRL. In later anagen stages, PRL could be detected in the proximal IRS and the inner layer of the ORS. The regressing (catagen) follicle showed a strong expression of PRL in the proximal ORS. In early anagen, PRLR immunoreactivity occurred in the distal part of the ORS around the developing IRS, and subsequently to a restricted area of the more distal ORS during later anagen stages and during early catagen. The dermal papilla (DP) stayed negative for both PRL and PRLR throughout the cycle. Telogen follicles showed only a very weak PRLR staining of ORS keratinocytes. The long-form PRLR transcript was shown by real-time polymerase chain reaction to be transiently down-regulated during early anagen, whereas PRL transcripts were up-regulated during mid anagen. Addition of PRL (400 ng/ml) to anagen hair follicles in murine skin organ culture for 72 hours induced premature catagen development in vitro along with a decline in the number of proliferating hair bulb keratinocytes. These data support the intriguing concept that PRL is generated locally in the hair follicle epithelium and acts directly in an autocrine or paracrine manner to modulate the hair cycle. Hair follicles are unusual in that they undergo lifelong cycles of growth and regression. Active hair growth (anagen) is accompanied by hair shaft elongation, melanogenesis, and by massive keratinocyte proliferation, whereas hair follicle regression (catagen) is characterized by terminal differentiation and apoptosis, resulting in the resting stage (telogen) and in hair shaft shedding (exogen). The molecular mechanisms that are responsible for this tightly controlled process are still not clear, but in the last decade a large, yet limited number of growth factors, cytokines, neuropeptides, neurotransmitters, and hormones have been shown to play important regulatory roles.1-3 A particularly intriguing issue in this context is the search for the set of locally generated hormones and neurotrophines that are involved in that growth control 4,5 beyond the well-recognized effects of locally metabolized steroid hormones.