Direct reprogramming of somatic cells into induced pluripotent stem (iPS) cells by only four transcription factors (Oct4, Sox2, Klf4, and c-Myc) has great potential for tissue-specific regenerative therapies, eliminating the ethical issues surrounding the use of embryonic stem cells and the rejection problems of using non-autologous cells. The reprogramming efficiency generally is very low, however, and the problems surrounding the introduction of viral genetic material are only partially investigated. Recent efforts to reduce the number of virally expressed transcription factors succeeded at reprogramming neural stem cells into iPS cells by overexpressing Oct4 alone. However, the relative inaccessibility and difficulty of obtaining neural cells in humans remains to be resolved. Here we report that dermal papilla (DP) cells, which are specialized skin fibroblasts thought to instruct hair follicle stem cells, endogenously express high levels of Sox2 and c-Myc, and that these cells can be reprogrammed into iPS cells with only Oct4 and Klf4. Moreover, we show that DP cells are reprogrammed more efficiently than skin and embryonic fibroblasts. iPS cells derived from DP cells expressed pluripotency genes and differentiated into cells from all germ layers in vitro and widely contributed to chimeric mice in vivo, including the germline. Our work establishes DP cells as an easily accessible source to generate iPS cells with efficiency and with less genetic material. This opens up the possibility of streamlined generation of skin-derived, patient-specific pluripotent stem cells and of ultimately replacing the remaining two factors with small molecules for safe generation of transplantable cells.