The study investigates the distinct fibroblast lineages that contribute to the dermal architecture in skin development and repair. Using transplantation assays and lineage tracing, the researchers found that skin connective tissue fibroblasts arise from two main lineages: one forming the upper dermis, including the dermal papilla and arrector pili muscle (APM), and the other forming the lower dermis, including reticular fibroblasts and adipocytes. The upper lineage is crucial for hair follicle formation, while the lower lineage mediates the initial wave of dermal repair in wounded adult skin. Epidermal beta-catenin activation expands the upper dermal lineage, making wounds more permissive for hair follicle formation. These findings explain why wounding leads to the formation of ECM-rich scar tissue lacking hair follicles and provide insights into fibroblast lineages in other tissues and their role in aging and disease.The study investigates the distinct fibroblast lineages that contribute to the dermal architecture in skin development and repair. Using transplantation assays and lineage tracing, the researchers found that skin connective tissue fibroblasts arise from two main lineages: one forming the upper dermis, including the dermal papilla and arrector pili muscle (APM), and the other forming the lower dermis, including reticular fibroblasts and adipocytes. The upper lineage is crucial for hair follicle formation, while the lower lineage mediates the initial wave of dermal repair in wounded adult skin. Epidermal beta-catenin activation expands the upper dermal lineage, making wounds more permissive for hair follicle formation. These findings explain why wounding leads to the formation of ECM-rich scar tissue lacking hair follicles and provide insights into fibroblast lineages in other tissues and their role in aging and disease.