Murine and human skin were examined for the presence of Myo/Nog cells that were originally discovered in the chick embryo by their expression of MyoD mRNA, noggin and the G8 antigen. Myo/Nog cells are the primary source of noggin in telogen hair follicles. They are scarce within the interfollicular dermis and absent in the epidermis. Within 24 h following epidermal abrasion, Myo/Nog cells increase in number in the follicles and appear in the wound. Myo/Nog cells are also recruited to the stroma of tumors formed from v-Ras-transformed keratinocytes (Ker/Ras). Human squamous cell carcinomas and malignant melanomas contain significantly more Myo/Nog cells than basal cell carcinomas. Myo/Nog cells are distinct from macrophages, granulocytes and cells expressing alpha smooth muscle actin in the tumor stroma. Myo/Nog cells may be modulators of skin homoeostasis and wound healing, and potential diagnostic and therapeutic targets in skin cancer.