Copyright © 2015 by the American College of Rheumatology. Objective Accumulation of myofibroblasts in fibrotic skin is a hallmark of systemic sclerosis (SSc; scleroderma), but the origins of these cells remain unknown. Because loss of intradermal adipose tissue is a consistent feature of cutaneous fibrosis, we sought to examine the hypothesis that myofibroblasts populating fibrotic dermis derive from adipocytic progenitors. Methods We performed genetic fate mapping studies to investigate the loss of intradermal adipose tissue and its potential role in fibrosis in mice with bleomycin-induced scleroderma. Modulation of adipocytic phenotypes ex vivo was investigated in adipose tissue-derived cells in culture. Results A striking loss of intradermal adipose tissue and its replacement with fibrous tissue were consistently observed in mice with bleomycin-induced fibrosis. Loss of adipose tissue and a decline in the expression of canonical adipogenic markers in lesional skin preceded the onset of dermal fibrosis and expression of fibrogenic markers. Ex vivo, subcutaneous adipocytes were driven by transforming growth factor β to preferentially undergo fibrogenic differentiation. Cell fate mapping studies in mice with the adiponectin promoter-driven Cre recombinase transgenic construct indicated that adiponectin-positive progenitors that are normally confined to the intradermal adipose tissue compartment were distributed throughout the lesional dermis over time, lost their adipocytic markers, and expressed myofibroblast markers in bleomycin-treated mice. Conclusion These observations establish a novel link between intradermal adipose tissue loss and dermal fibrosis and demonstrate that adiponectin-positive intradermal progenitors give rise to dermal myofibroblasts. Adipose tissue loss and adipocyte-myofibroblast transition might be primary events in the pathogenesis of cutaneous fibrosis that represent novel potential targets for therapeutic intervention.