The Rho family GTPases Cdc42 and Rac1 are critical regulators of the actin cytoskeleton and are essential for skin and hair function. Wiskott-Aldrich syndrome family proteins act downstream of these GTPases, controlling actin assembly and cytoskeletal reorganization, but their role in epithelial cells has not been characterized in vivo. Here, we used a conditional knockout approach to assess the role of neural Wiskott-Aldrich syndrome protein (N-WASP), the ubiquitously expressed Wiskott-Aldrich syndrome-like (WASL) protein, in mouse skin. We found that N-WASP deficiency in mouse skin led to severe alopecia, epidermal hyperproliferation, and ulceration, without obvious effects on epidermal differentiation and wound healing. Further analysis revealed that the observed alopecia was likely the result of a progressive and ultimately nearly complete block in hair follicle (HF) cycling by 5 months of age. N-WASP deficiency also led to abnormal proliferation of skin progenitor cells, resulting in their depletion over time. Furthermore, N-WASP deficiency in vitro and in vivo correlated with decreased GSK-3beta phosphorylation, decreased nuclear localization of beta-catenin in follicular keratinocytes, and decreased Wnt-dependent transcription. Our results indicate a critical role for N-WASP in skin function and HF cycling and identify a link between N-WASP and Wnt signaling. We therefore propose that N-WASP acts as a positive regulator of beta-catenin-dependent transcription, modulating differentiation of HF progenitor cells.