Mature adipocytes store fatty acids and are a common component of tissue stroma. Adipocyte function in regulating bone marrow, skin, muscle, and mammary gland biology is emerging, but the role of adipocyte-derived lipids in tissue homeostasis and repair is poorly understood. Here, we identify an essential role for adipocyte lipolysis in regulating inflammation and repair after injury in skin. Genetic mouse studies revealed that dermal adipocytes are necessary to initiate inflammation after injury and promote subsequent repair. We find through histological, ultrastructural, lipidomic, and genetic experiments in mice that adipocytes adjacent to skin injury initiate lipid release necessary for macrophage inflammation. Tamoxifen-inducible genetic lineage tracing of mature adipocytes and single-cell RNA sequencing revealed that dermal adipocytes alter their fate and generate ECM-producing myofibroblasts within wounds. Thus, adipocytes regulate multiple aspects of repair and may be therapeutic for inflammatory diseases and defective wound healing associated with aging and diabetes.