Quiescent hair follicle (HF) bulge stem cells (SCs) differentiate to early progenitor (EP) hair germ (HG) cells, which divide to produce transit-amplifying matrix cells. EPs can revert to SCs upon injury, but whether this dedifferentiation occurs in normal HF homeostasis (hair cycle) and the mechanisms regulating both differentiation and dedifferentiation are unclear. Here, we use lineage tracing, gain of function, transcriptional profiling, and functional assays to examine the role of observed endogenous Runx1 level changes in the hair cycle. We find that forced Runx1 expression induces hair degeneration (catagen) and simultaneously promotes changes in the quiescent bulge SC transcriptome toward a cell state resembling the EP HG fate. This cell-state transition is functionally reversible. We propose that SC differentiation and dedifferentiation are likely to occur during normal HF degeneration and niche restructuring in response to changes in endogenous Runx1 levels associated with SC location with respect to the niche.