In the skin and gill epidermis of fish, ionocytes develop alongside keratinocytes and maintain body fluid ionic homeostasis that is essential for adaptation to environmental fluctuations. It is known that ionocyte progenitors in zebrafish embryos are specified from p63
+
epidermal stem cells through a patterning process involving DeltaC (Dlc)-Notch-mediated lateral inhibition, which selects scattered
dlc
+
cells into the ionocyte progenitor fate. However, mechanisms by which the ionocyte progenitor population is modulated remain unclear. Krüppel-like factor 4 (Klf4) transcription factor was previously implicated in the terminal differentiation of mammalian skin epidermis and is known for its bifunctional regulation of cell proliferation in a tissue context-dependent manner. Here, we report novel roles for zebrafish Klf4 in the ventral ectoderm during embryonic skin development. We found that Klf4 was expressed in p63
+
epidermal stem cells of the ventral ectoderm from 90% epiboly onward. Knockdown or knockout of
klf4
expression reduced the proliferation rate of p63
+
stem cells, resulting in decreased numbers of p63
+
stem cells,
dlc
-
p63
+
keratinocyte progenitors and
dlc
+
p63
+
ionocyte progenitor cells. These reductions subsequently led to diminished keratinocyte and ionocyte densities and resulted from upregulation of the well-known cell cycle regulators,
p53
and
cdkn1a
/
p21
. Moreover, mutation analyses of the KLF motif in the
dlc
promoter, combined with
VP16-klf4
or
engrailed-klf4
mRNA overexpression analyses, showed that Klf4 can bind the
dlc
promoter and modulate lateral inhibition by directly repressing
dlc
expression. This idea was further supported by observing the lateral inhibition outcomes in
klf4
-overexpressing or knockdown embryos. Overall, our experiments delineate novel roles for zebrafish Klf4 in regulating the ionocyte progenitor population throughout early stem cell stage to initiation of terminal differentiation, which is dependent on Dlc-Notch-mediated lateral inhibition.