Amputation of the axolotl forelimb results in the formation of a blastema, a transient tissue where progenitor cells accumulate prior to limb regeneration. However, the molecular understanding of blastema formation had previously been hampered by the inability to identify and isolate blastema precursor cells in the adult tissue. We have used a combination of Cre-loxP reporter lineage tracking and single-cell messenger RNA sequencing (scRNA-seq) to molecularly track mature connective tissue (CT) cell heterogeneity and its transition to a limb blastema state. We have uncovered a multiphasic molecular program where CT cell types found in the uninjured adult limb revert to a relatively homogenous progenitor state that recapitulates an embryonic limb bud-like phenotype including multipotency within the CT lineage. Together, our data illuminate molecular and cellular reprogramming during complex organ regeneration in a vertebrate.