The epidermis and its related appendages such as the hair follicle constitute the epithelial compartment of the skin. The exact location and distribution of the keratinocyte colony-forming cells within the epidermis or its appendages are unknown. We report that in the rat vibrissa, keratinocyte colony-forming cells are highly clustered in the bulge-containing region. Approximately 95% of the total colonies formed in culture from fractionated vibrissae were in this location and fewer than 4% were located in the matrix area of the follicle. Finer dissection of the bulge-containing region located the colony-forming cells in the small part containing the bulge itself. The segregation of keratinocyte colony-forming cells in the bulge confirms the hypothesis that the bulge is the reservoir of the stem cells responsible for the long-term growth of the hair follicle and perhaps of the epidermis as well.