The transcriptional coactivator complex Mediator (MED) facilitates transcription of nuclear hormone receptors and other transcription factors. We have previously isolated the MED complex from primary keratinocytes (KCs) as the vitamin D receptor-interacting protein complex. We identified a role for MED in KC proliferation and differentiation in cultured KCs. Here, we investigated the in vivo role of MED by generating a conditional null mice model in which a critical subunit of the MED complex, MED1, is deleted from their KCs. The MED1 ablation resulted in aberrant hair differentiation and cycling, leading to hair loss. During the first hair follicle (HF) cycle, MED1 deletion resulted in a rapid regression of the HFs. Hair differentiation was reduced, and β-catenin/vitamin D receptor (VDR)-regulated gene expression was markedly decreased. In the subsequent adult hair cycle, MED1 ablation activated the initiation of HF cycling. Shh signaling was increased, but terminal differentiation was not sufficient. Deletion of MED1 also caused hyperproliferation of interfollicular epidermal KCs, and increased the expression of epidermal differentiation markers. These results indicate that MED1 has a critical role in regulating hair/epidermal proliferation and differentiation.