Highly regenerative tissues continuously produce terminally differentiated cells to replace those that are lost. How they orchestrate the complex transition from undifferentiated stem cells towards post-mitotic, molecularly distinct and often spatially segregated differentiated populations is not well understood. In the adult skin epidermis, the stem cell compartment contains molecularly heterogeneous subpopulations whose relationship to the complete trajectory of differentiation remains unknown. Here we show that differentiation, from commitment to exit from the stem cell layer, is a multi-day process wherein cells transit through a continuum of transcriptional changes with upregulation of differentiation genes preceding downregulation of typical stemness genes. Differentiation-committed cells remain capable of dividing to produce daughter cells fated to further differentiate, demonstrating that differentiation is uncoupled from cell cycle exit. These cell divisions are not required as part of an obligate transit-amplifying programme but help to buffer the differentiating cell pool during heightened demand. Thus, instead of distinct contributions from multiple progenitors, a continuous gradual differentiation process fuels homeostatic epidermal turnover.