The concept of mesenchymal fibroblasts has evolved over the past two decades from a relatively inert structural cell type to a dynamic, pluripotent cell lineage controlling normal connective tissue formation, homeostasis, and repair and as principle players in pathogenic scarring and fibrosis. In wound healing and tissue repair, fibroblasts provide proinflammatory signals and synthesize interstitial collagens, fibronectins, and other matrix components to repair the damaged tissue. Fibroblasts can differentiate into the myofibroblast, a specialized contractile cell type responsible for wound closure, tissue contraction, and scarring. This article reviews our current understanding of the origins of mesenchymal cells and their role in excessive scarring and fibrogenesis and in the systemic fibrotic disease scleroderma.