Precisely controlled remodeling of the basement membrane (BM) is crucial for morphogenesis, but its molecular and tissue-level dynamics, underlying mechanisms, and functional significance in mammals remain largely unknown due to limited visualization tools. We developed mouse lines in which the endogenous collagen IV gene (Col4a2) was fused with a fluorescent tag. Through live imaging of developing hair follicles, we reveal a spatial gradient in the turnover rate of COL4A2 that is closely coupled with both the BM expansion rate and the proliferation rate of epithelial progenitors. Epithelial progenitors are displaced with directionally expanding BMs but do not actively migrate on stationary BM. The addition of a matrix metalloproteinase inhibitor delays COL4A2 turnover, restrains BM expansion, and increases perpendicular divisions of epithelial progenitors, altering hair follicle morphology. Our findings highlight the spatially distinct dynamics of BM and their key roles in orchestrating progenitor cell behavior and organ shape during development.