Skin is a representative self-renewing tissue containing stem cells. Although many attempts have been made to define and isolate skin-derived stem cells, establishment of a simple and reliable isolation procedure remains a goal to be achieved. Here, we report the isolation of cells having stem cell properties from mouse embryonic skin using a simple selection method based on an assumption that stem cells may grow in an anchorage-independent manner. We inoculated single cell suspensions prepared from mouse embryonic dermis into a temperature-sensitive gel and propagated the resulting colonies in a monolayer culture. The cells named dermis-derived epithelial progenitor-1 (DEEP) showed epithelial morphology and grew rapidly to a more than 200 population doubling level over a period of 250 days. When the cells were kept confluent, they spontaneously formed spheroids and continuously grew even in spheroids. Immunostaining revealed that all of the clones were positive for the expression of cytokeratin-8, -18, -19, and E-cadherin and negative for the expression of cytokeratin-1, -5, -6, -14, -20, vimentin, nestin, a ckit. Furthermore, they expressed epithelial stem cell markers such as p63, integrin beta1, and S100A6. On exposure to TGFbeta in culture, some of DEEP-1 cells expressed alpha-smooth muscle actin. When the cells were transplanted into various organs of adult SCID mice, a part of the inoculated cell population acquired neural, hepatic, and renal cell properties. These results indicate that the cells we isolated were of epithelial stem cell origin and that our new approach is useful for isolation of multipotent stem cells from skin tissues.