Fibro-adipogenic progenitors (FAPs) are currently defined by their anatomical position, expression of non-specific membrane-associated proteins, and ability to adopt multiple lineages in vitro. Gene expression analysis at single-cell level reveals that FAPs undergo dynamic transitions through a spectrum of cell states that can be identified by differential expression levels of Tie2 and Vcam1. Different patterns of Vcam1-negative Tie2^high or Tie2^low and Tie2^low/Vcam1-expressing FAPs are detected during neonatal myogenesis, response to acute injury and Duchenne Muscular Dystrophy (DMD). RNA sequencing analysis identified cell state-specific transcriptional profiles that predict functional interactions with satellite and inflammatory cells. In particular, Vcam1-expressing FAPs, which exhibit a pro-fibrotic expression profile, are transiently activated by acute injury in concomitance with the inflammatory response. Aberrant persistence of Vcam1-expressing FAPs is detected in DMD muscles or upon macrophage depletion, and is associated with muscle fibrosis, thereby revealing how disruption of inflammation-regulated FAPs dynamics leads to a pathogenic outcome.