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Skeletal muscle satellite cells, located between the basal lamina and plasma membrane of myofibers, are required for skeletal muscle regeneration. The capacity of satellite cells as well as other cell lineages including mesoangioblasts, mesenchymal stem cells, and side population (SP) cells to contribute to muscle regeneration has complicated the identification of a satellite stem cell. We have characterized a rare subset of the muscle SP that efficiently engrafts into the host satellite cell niche when transplanted into regenerating muscle, providing 75% of the satellite cell population and 30% of the myonuclear population, respectively. These cells are found in the satellite cell position, adhere to isolated myofibers, and spontaneously undergo myogenesis in culture. We propose that this subset of SP cells (satellite-SP cells), characterized by ABCG2, Syndecan-4, and Pax7 expression, constitutes a self-renewing muscle stem cell capable of generating both satellite cells and their myonuclear progeny in vivo.