Corneal epithelium is a self-renewing tissue. Recent studies indicate that corneal epithelial stem cells reside preferentially in the basal layer of peripheral cornea in the limbal zone, rather than uniformly in the entire corneal epithelium. This idea is supported by a unique limbal/corneal expression pattern of the K3 keratin marker for corneal-type differentiation; the preferential distribution of the slow-cycling (label-retaining) cells in the limbus; the superior proliferative capacity of limbal cells as compared with central corneal epithelial cells in vitro and in vivo; and the ability of limbal basal cells to rescue/reconstitute severely damaged or completely depleted corneal epithelium upon transplantation. The limbal/stem cell concept provides explanations for several paradoxical properties of corneal epithelium including the predominance of tumor formation in the limbal zone, the centripetal migration of peripheral corneal cells toward the central cornea, and the "mature-looking" phenotype of the corneal basal cells. The limbal stem cell concept has led to a better understanding of the strategies that a stratified squamous epithelium uses in repair, to a new classification of various anterior surface epithelial diseases, to a repudiation of the classical idea of "conjunctival transdifferentiation", and to a new surgical procedure called limbal stem cell transplantation.