Hair follicle formation and cycling involve extensive and continuous interactions between epithelial and mesenchymal components. A system for rapidly and reproducibly generating hair follicles from dissociated epithelial and mesenchymal cells is described here. The system serves both as a tool for measuring the trichogenic property of cells and as a tool for studying the mechanisms that dissociated cells use to assemble an organ. In this system, hair follicles develop when dissociated cells, isolated from newborn mouse skin, are injected into adult mouse truncal skin. This morphogenetic process involves the aggregation of epithelial cells to form clusters that are sculpted by apoptosis to generate "infundibular cysts". From the "infundibular cysts", hair germs form centrifugally followed by follicular buds and then pegs that grow asymmetrically to differentiate into cycling mature pilosebaceous structures. Marker studies correlate the molecular differentiation of these follicles with in situ systems. This study suggests that the earliest phase of a developing epithelial-mesenchymal system--even from dissociated cell preparations--requires an epithelial platform.