Hair follicles (HFs) undergo precisely regulated cycles of active regeneration (anagen), involution (catagen), and relative quiescence (telogen). Hair follicle stem cells (HFSCs) play important roles in regenerative cycling. Elucidating mechanisms that govern HFSC behavior can help uncover the underlying principles of hair development, hair growth disorders, and skin cancers. RNA-binding proteins of the Musashi (Msi) have been implicated in the biology of different stem cell types, yet they have not been studied in HFSCs. Here we utilized gain- and loss-of-function mouse models to demonstrate that forced MSI2 expression retards anagen entry and consequently delays hair growth, whereas loss of Msi2 enhances hair regrowth. Furthermore, our findings show that Msi2 maintains quiescent state of HFSCs in the process of the telogen-to-anagen transition. At the molecular level, our unbiased transcriptome profiling shows that Msi2 represses Hedgehog signaling activity and that Shh is its direct target in the hair follicle. Taken together, our findings reveal the importance of Msi2 in suppressing hair regeneration and maintaining HFSC quiescence. The previously unreported Msi2-Shh-Gli1 pathway adds to the growing understanding of the complex network governing cyclic hair growth.