SummarySatellite cells are a heterogeneous population of skeletal muscle specific stem cells capable of self-renewal and differentiation after transplantation. Whether quiescent satellite cells can self-renew and contribute to muscle fiber repair in their endogenous environment in normal regenerating muscle has remained unknown. The transcription factor Pax7 is expressed in satellite cells and is critical for establishing the adult satellite cell pool. Using a temporally-inducible genetic lineage tracing approach (Pax7-CreERtm; R26R-lacZ) to fate-map adult satellite cells, we show that in response to injury quiescent adult Pax7+ cells enter the cell cycle; a subpopulation return to quiescence to fully replenish the satellite cell compartment and the others contribute to de novo muscle fiber formation. We demonstrate that Sprouty1 (Spry1), an inhibitor of receptor tyrosine kinase signaling, is robustly expressed in quiescent Pax7+ satellite cells in uninjured adult muscle, down-regulated in proliferating myogenic cells in injured muscles, and re-induced as Pax7+ cells return to quiescence in regenerated muscles. We show through deletion of Spry1 specifically in cycling adult Pax7+ satellite cells, that Spry1 is required for the return to quiescence and homeostasis of the self-renewing Pax7+ satellite cell pool during repair. Satellite cells unable to return to quiescence succumb to apoptosis leading to a diminished self-renewing Pax7-derived satellite cell pool. Our results define a novel role for Spry1 in adult stem cell biology and tissue repair.