Planarian neoblasts are pluripotent, adult somatic stem cells and lineage-primed progenitors that are required for the production and maintenance of all differentiated cell types, including the germline. Neoblasts, originally defined as undifferentiated cells residing in the adult parenchyma, are frequently compared to embryonic stem cells yet their developmental origin remains obscure. We investigated the provenance of neoblasts during Schmidtea mediterranea embryogenesis, and report that neoblasts arise from an anarchic, cycling piwi-1+ population wholly responsible for production of all temporary and definitive organs during embryogenesis. Early embryonic piwi-1+ cells are molecularly and functionally distinct from neoblasts: they express unique cohorts of early embryo enriched transcripts and behave differently than neoblasts in cell transplantation assays. Neoblast lineages arise as organogenesis begins and are required for construction of all major organ systems during embryogenesis. These subpopulations are continuously generated during adulthood, where they act as agents of tissue homeostasis and regeneration.