De novo organ regeneration has been observed in several lower organisms, as well as rodents; however, demonstrating these regenerative properties in human cells and tissues has been challenging. In the hair follicle, rodent hair follicle-derived dermal cells can interact with local epithelia and induce de novo hair follicles in a variety of hairless recipient skin sites. However, multiple attempts to recapitulate this process in humans using human dermal papilla cells in human skin have failed, suggesting that human dermal papilla cells lose key inductive properties upon culture. Here, we performed global gene expression analysis of human dermal papilla cells in culture and discovered very rapid and profound molecular signature changes linking their transition from a 3D to a 2D environment with early loss of their hair-inducing capacity. We demonstrate that the intact dermal papilla transcriptional signature can be partially restored by growth of papilla cells in 3D spheroid cultures. This signature change translates to a partial restoration of inductive capability, and we show that human dermal papilla cells, when grown as spheroids, are capable of inducing de novo hair follicles in human skin.