Skin scarring, the end result of adult wound healing, is detrimental to tissue form and function. lineage-positive fibroblasts (EPFs) are known to function in scarring, but lineage-negative fibroblasts (ENFs) remain poorly characterized. Using cell transplantation and transgenic mouse models, we identified a dermal ENF subpopulation that gives rise to postnatally derived EPFs by activating expression during adult wound healing. By studying ENF responses to substrate mechanics, we found that mechanical tension drives activation via canonical mechanotransduction signaling. Finally, we showed that blocking mechanotransduction signaling with either verteporfin, an inhibitor of Yes-associated protein (YAP), or fibroblast-specific transgenic YAP knockout prevents activation and promotes wound regeneration by ENFs, with recovery of skin appendages, ultrastructure, and mechanical strength. This finding suggests that there are two possible outcomes to postnatal wound healing: a fibrotic response (EPF-mediated) and a regenerative response (ENF-mediated).