Peripheral innervation plays an important role in regulating tissue repair and regeneration. Here we provide evidence that injured peripheral nerves provide a reservoir of mesenchymal precursor cells that can directly contribute to murine digit tip regeneration and skin repair. In particular, using single-cell RNA sequencing and lineage tracing, we identify transcriptionally distinct mesenchymal cell populations within the control and injured adult nerve, including neural crest-derived cells in the endoneurium with characteristics of mesenchymal precursor cells. Culture and transplantation studies show that these nerve-derived mesenchymal cells have the potential to differentiate into non-nerve lineages. Moreover, following digit tip amputation, neural crest-derived nerve mesenchymal cells contribute to the regenerative blastema and, ultimately, to the regenerated bone. Similarly, neural crest-derived nerve mesenchymal cells contribute to the dermis during skin wound healing. These findings support a model where peripheral nerves directly contribute mesenchymal precursor cells to promote repair and regeneration of injured mammalian tissues.