In contrast to mammals, salamanders can regenerate complex structures after injury, including entire limbs. A central question is whether the generation of progenitor cells during limb regeneration and mammalian tissue repair occur via separate or overlapping mechanisms. Limb regeneration depends on the formation of a blastema, from which the new appendage develops. Dedifferentiation of stump tissues, such as skeletal muscle, precedes blastema formation, but it was not known whether dedifferentiation involves stem cell activation. We describe a multipotent Pax7⁺ satellite cell population located within the skeletal muscle of the salamander limb. We demonstrate that skeletal muscle dedifferentiation involves satellite cell activation and that these cells can contribute to new limb tissues. Activation of salamander satellite cells occurs in an analogous manner to how the mammalian myofiber mobilizes stem cells during skeletal muscle tissue repair. Thus, limb regeneration and mammalian tissue repair share common cellular and molecular programs. Our findings also identify satellite cells as potential targets in promoting mammalian blastema formation.