Bladder fibrosis is an undesired end point of injury of obstruction and often renders the smooth muscle layer noncompliant. In many cases, the long-term effect of bladder fibrosis is renal failure. Despite our understanding of the progression of this disease, little is known about the cellular mechanisms that lead to a remodeled bladder wall. Resident stem (progenitor) cells have been identified in various organs such as the brain, heart and lung. These cells function normally during organ homeostasis, but become dysregulated after organ injury. Here, we aimed to characterize a mesenchymal progenitor cell population as a first step in understanding its role in bladder fibrosis. Using fluorescence activated cell sorting (FACS), we identified a Sca-1⁺/ CD34⁺/ lin^- (PECAM^-: CD45^-: Ter119^-) population in the adult murine bladder. These cells were localized to the stromal layer of the adult bladder and appeared by postnatal day 1. Cultured Sca-1⁺/ CD34⁺/ lin^- bladder cells self-renewed, formed colonies and spontaneously differentiated into cells expressing smooth muscle genes. These cells differentiated into other mesenchymal lineages (chondrocytes, adipocytes and osteocytes) upon culture in induction medium. Both acute and partial obstruction of the bladder reduced expression of CD34 and changed localization of Sca-1 to the urothelium. Partial obstruction resulted in upregulation of fibrosis genes within the Sca-1⁺/CD34⁺/lin^- population. Our data indicate a resident, mesenchymal stem cell population in the bladder that is altered by bladder obstruction. These findings provide new information about the cellular changes in the bladder that may be associated with bladder fibrosis.