Dermal fibroblasts are the major cell type in the skin's dermal layer. These cells originate from distinct locations of the embryo and reside in unique niches in the dermis. Different dermal fibroblasts exhibit distinct roles in skin development, homeostasis, and wound healing. Therefore, these cells are becoming attractive candidates for cell-based therapies in wound healing. Human skin dermis comprises multiple fibroblast subtypes, including papillary, reticular, and hair follicle-associated fibroblasts, and myofibroblasts after wounding. Recent studies reveal that these cells play distinct roles in wound healing and contribute to diverse healing outcomes, including nonhealing chronic wound or excessive scar formation, such as hypertrophic scars (HTS) and keloids, with papillary fibroblasts having antiscarring and reticular fibroblast scar-forming properties. The identities and functions of dermal fibroblast subpopulations in many respects remain unknown. In this review, we summarize the current understanding of dermal fibroblast heterogeneity, including their defined cell markers and dermal niches, dynamic changes, and contributions to skin wound healing, with the emphasis on scarless healing, healing with excessive scars (HTS and keloids), chronic wounds, and the potential application of this heterogeneity for developing cell-based therapies that allow wounds to heal faster with less scarring. Heterogeneous dermal fibroblast populations and their functions are poorly characterized. Refining and advancing our understanding of dermal fibroblast heterogeneity and their participation in skin homeostasis and wound healing may create potential therapeutic applications for nonhealing chronic wounds or wounds that heal with excessive scarring.