Skin is the largest organ of the human body. Its architecture and physiological functions depend on diverse populations of epidermal cells and dermal fibroblasts. Reciprocal communication between the epidermis and dermis plays a key role in skin development, homeostasis and repair. While several stem cell populations have been identified in the epidermis with distinct locations and functions, there is additional heterogeneity within the mesenchymal cells of the dermis. Here, we discuss the current knowledge of how the Hippo pathway and its downstream effectors Yes-associated protein (YAP) and transcriptional coactivator with PDZ-binding motif (TAZ) contribute to the maintenance, activation and coordination of the epidermal and dermal cell populations during development, homeostasis, wound healing and cancer.