They hope that the new findings could help understand basic mechanisms involved not only in formation of skin, but also on skin cancer and other epithelial cancers.
According to lead researcher Claus Nerlov, at some point, the stem cells at the base of the skin stop proliferating and start differentiating into the cells that form the skin itself.
To do so, they must turn off the 'stem cell programme' in their genes and turn on the 'skin cell programme'.
It is believed that a family of proteins called C/EBPs might be involved in this process.
They are known to regulate it in other types of stem cell, however which C/EBP protein controlled the switch in skin was not known.
Nerlov and his group at EMBL Monterotondo have discovered two proteins called C/EBPa and C/EBP.
After removing the genes that encode C/EBPa and ß specifically in the skin of mouse embryos, the study showed that without these proteins the skin of the mice did not form properly.
"Mice with neither C/EBPa nor ß had taut and shiny skin that couldn't keep the water inside their bodies," Nature magazine quoted Nerlov as saying.
"They lacked many of the proteins that make skin mechanically strong and water tight, and they died of de-hydration shortly after birth," Nerlov added.
However, a single working copy of either the gene for C/EBPa or the gene for C/EBPß was enough to ensure that skin developed properly.
The study appears in Nature Cell Biology.