Dermal fibroblasts represent a heterogeneous population of cells with diverse features that remain largely undefined. We reveal the presence of at least two fibroblast lineages in murine dorsal skin. Lineage tracing and transplantation assays demonstrate that a single fibroblast lineage is responsible for the bulk of connective tissue deposition during embryonic development, cutaneous wound healing, radiation fibrosis, and cancer stroma formation. Lineage-specific cell ablation leads to diminished connective tissue deposition in wounds and reduces melanoma growth. Using flow cytometry, we identify CD26/DPP4 as a surface marker that allows isolation of this lineage. Small molecule-based inhibition of CD26/DPP4 enzymatic activity during wound healing results in diminished cutaneous scarring. Identification and isolation of these lineages hold promise for translational medicine aimed at in vivo modulation of fibrogenic behavior.