Allergic skin diseases are common, but basal roles for type 2 immunity in cutaneous homeostasis are incompletely understood. Here, we show that skin group 2 innate lymphoid cells (ILC2s) are the predominant resident cells that secretes IL-13, which attenuates epithelial cell proliferation during anagen throughout the hair follicle (HF), including in HF stem cells. Although HF are normal in the absence of type 2 immunity, colonization with the commensal mite, Demodex musculi, results in epithelial proliferation and aberrant hair follicle morphology accompanied by loss of stable commensalism with massive infestation and expansion of inflammatory ILC2s and other immune cells. Topical anti-parasitic agents, but not broad-spectrum antibiotics, reversed the phenotype. Commensal Demodex colonization of mammalian hair follicles is ubiquitous, including in humans, revealing an unanticipated role for ILC2s and type 2 immunity for skin homeostasis in the normal environment.