Background Keloid disease is a benign, quasineoplastic disease with a high recurrence rate. Mesenchymal-like stem cells (MLSC) have previously been demonstrated in keloid scars and may be involved in keloid pathobiology. However, as these cells have only been examined by single colour fluorescence activated cell sorting (FACS) alone, they need to be more comprehensively characterized so that the key cellular contributors to keloid scars can be better understood. Objectives To identify and characterize MLSC in intralesional and extralesional keloid, and to distinguish haematopoietic stem cells (HSC) from mesenchymal stem cells (MSC). Methods and patients Punch biopsies from intralesional (top, middle and margin) and extralesional keloid scar sites were obtained from 17 patients with a keloid. Multicolour FACS analysis using antibodies specific for HSC markers CD34 and CD117 and MSC markers CD13, CD29, CD44 and CD90 was performed on freshly isolated keloid scar cells and on passage 0 and 1 cells. This was complemented by real-time quantitative polymerase chain reaction (PCR) and immunohistological in situ analyses. Results Keloid scars contain distinct subpopulations of MLSCs. Cells positive for CD13, CD29, CD44 and CD90 were found to be significantly (P <0·05) higher in the top and middle compartments of keloid scars compared with extralesional skin, where cells positive for CD34, CD90 and CD117 (representing HSCs) predominated. A unique population of CD34+ cells (cells positive for CD13, CD29, CD34, CD44 and CD90) were found in keloid scars and in extralesional skin. FACS and quantitative PCR analysis showed that many of the MSC markers were progressively downregulated and all HSC markers were lost during extended keloid fibroblast culture up to passage 1. Conclusion We have found distinct subpopulations of haematopoietic and nonhaematopoietic MSC in keloid scars, whereby HSC accumulate extralesionally, while keloids seem to provide a niche environment for nonhaematopoietic MSC. Future therapy of keloids may have to target differentially both stem cell populations in order to deprive these tumours of their regenerative cell pools. © 2010 British Association of Dermatologists.