ABSTRACT: The current treatments for severe skin injury all involve skin grafting. However, there is a worldwide shortage of donor skin tissue. In this study, we examined the advantages of using human amniotic fluid stem (hAFS) cells in skin wound healing. In vitro, hAFS cells differentiate into keratinocytes (termed hAFS-K). Like keratinocytes, hAFS-K cells express the markers K5, K14, K10 and involucrin; display typical cellular structure, including a tonofibril-rich cytoplasm; and construct a completely pluristratified epithelium in 3D culture. In vivo, in a mouse excisional wound model, GFP-positive hAFS cells participate in wound repair. Co-localization of GFP/K14 and GFP/K10 in the repaired epidermis demonstrated that hAFS cells can differentiate into keratinocytes. Real-time PCR results confirmed that hAFS cells can initiate and promote early-stage repair of skin damage. During wound repair, hAFS cells did not directly secrete repair-related factors, such as bFGF, VEGF, CXCL12, TGF-?1 and KGF, and provided a moderate inflammation reaction with lower expression of IL-1?, IL-6, TNF-?, Cox2 and Mac3. In hAFS cells, the negative co-stimulatory molecule B7H4 regulates low immunogenicity, which can provide a modest inflammatory reaction microenvironment for wound repair. Furthermore, with their uniquely high proliferation rate, hAFS cells offer a promising alternative for epidermal regeneration.