Tendon regeneration has emerged as an area of interest due to the challenging healing process of avascular tendon tissue. During tendon healing after injury, the formation of a fibrous scar can limit tendon strength and lead to subsequent complications. The specific biological mechanisms that cause fibrosis across different cellular subtypes within the tendon and across different tendons in the body continue to remain unknown. Herein, we review the current understanding of tendon healing, fibrosis mechanisms, and future directions for treatments. We summarize recent research on the role of fibroblasts throughout tendon healing and describe the functional and cellular heterogeneity of fibroblasts and tendons. The review notes gaps in tendon fibrosis research, with a focus on characterizing distinct fibroblast subpopulations in the tendon. We highlight new techniques in the field that can be used to enhance our understanding of complex tendon pathologies such as fibrosis. Finally, we explore bioengineering tools for tendon regeneration and discuss future areas for innovation. Exploring the heterogeneity of tendon fibroblasts on the cellular level can inform therapeutic strategies for addressing tendon fibrosis and ultimately reduce its clinical burden.