Ectopic accumulation of adipose in the skeletal muscle is associated with muscle wasting, insulin resistance and diabetes. However, the developmental origin of postnatal intramuscular adipose and its interaction with muscle tissue are unclear. We report here that compared to the fast EDL muscles, slow SOL muscles are more enriched with adipogenic progenitors and have higher propensity to form adipose. Using Cre/LoxP mediated lineage tracing in mice, we show that intramuscular adipose in both EDL and SOL muscles is exclusively derived from a Pax3(-) non-myogenic lineage. In contrast, inter-scapular brown adipose is derived from the Pax3(+) lineage. To dissect the interaction between adipose and skeletal muscle tissues, we used Myf5-Cre and aP2-Cre mice in combination with ROSA26-iDTR mice to genetically ablate myogenic and adipogenic cell lineages, respectively. Whereas ablation of the myogenic cell lineage facilitated adipogenic differentiation, ablation of the adipogenic cell lineage surprisingly impaired the regeneration of acutely injured skeletal muscles. These results reveal striking heterogeneity of tissue-specific adipose and a previously unappreciated role of intramuscular adipose in skeletal muscle regeneration.