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Vascular progenitors were previously isolated from blood and bone marrow; herein, we define the presence, phenotype, potential, and origin of vascular progenitors resident within adult skeletal muscle. Two distinct populations of cells were simultaneously isolated from hindlimb muscle: the side population (SP) of highly purified hematopoietic stem cells and non-SP cells, which do not reconstitute blood. Muscle SP cells were found to be derived from, and replenished by, bone marrow SP cells; however, within the muscle environment, they were phenotypically distinct from marrow SP cells. Non-SP cells were also derived from marrow stem cells and contained progenitors with a mesenchymal phenotype. Muscle SP and non-SP cells were isolated from Rosa26 mice and directly injected into injured muscle of genetically matched recipients. SP cells engrafted into endothelium during vascular regeneration, and non-SP cells engrafted into smooth muscle. Thus, distinct populations of vascular progenitors are resident within skeletal muscle, are derived from bone marrow, and exhibit different cell fates during injury-induced vascular regeneration.