This study identifies a new population of fibro/adipogenic progenitors (FAPs) in skeletal muscle that arise from a distinct developmental lineage. FAPs are quiescent in healthy muscle but proliferate in response to damage, suggesting a role in regeneration. Transplantation of purified FAPs results in the generation of ectopic white fat, indicating that the environment controls their engraftment. FAPs do not generate myofibers but enhance the differentiation of primary myogenic progenitors in co-culture experiments. These findings suggest that FAPs provide a transient source of pro-differentiation signals for proliferating myogenic progenitors, facilitating muscle regeneration.This study identifies a new population of fibro/adipogenic progenitors (FAPs) in skeletal muscle that arise from a distinct developmental lineage. FAPs are quiescent in healthy muscle but proliferate in response to damage, suggesting a role in regeneration. Transplantation of purified FAPs results in the generation of ectopic white fat, indicating that the environment controls their engraftment. FAPs do not generate myofibers but enhance the differentiation of primary myogenic progenitors in co-culture experiments. These findings suggest that FAPs provide a transient source of pro-differentiation signals for proliferating myogenic progenitors, facilitating muscle regeneration.