Skeletal muscle contains progenitor cells (satellite cells) that maintain and repair muscle. It also contains muscle side population (SP) cells, which express Abcg2 and may participate in muscle regeneration or may represent a source of satellite cell replenishment. In Abcg2-null mice, the SP fraction is lost in skeletal muscle, although the significance of this loss was previously unknown. We show that cells expressing Abcg2 increased upon injury and that muscle regeneration was impaired in Abcg2-null mice, resulting in fewer centrally nucleated myofibers, reduced myofiber size, and fewer satellite cells. Additionally, using genetic lineage tracing, we demonstrate that the progeny of Abcg2-expressing cells contributed to multiple cell types within the muscle interstitium, primarily endothelial cells. After injury, Abcg2 progeny made a minor contribution to regenerated myofibers. Furthermore, Abcg2-labeled cells increased significantly upon injury and appeared to traffic to muscle from peripheral blood. Together, these data suggest an important role for Abcg2 in positively regulating skeletal muscle regeneration.