Satellite cells are resident myogenic progenitors in postnatal skeletal muscle involved in muscle postnatal growth and adult regenerative capacity. Here, we identify and describe a population of muscle-resident stem cells, which are located in the interstitium, that express the cell stress mediator PW1 but do not express other markers of muscle stem cells such as Pax7. PW1(+)/Pax7(-) interstitial cells (PICs) are myogenic in vitro and efficiently contribute to skeletal muscle regeneration in vivo as well as generating satellite cells and PICs. Whereas Pax7 mutant satellite cells show robust myogenic potential, Pax7 mutant PICs are unable to participate in myogenesis and accumulate during postnatal growth. Furthermore, we found that PICs are not derived from a satellite cell lineage. Taken together, our findings uncover a new and anatomically identifiable population of muscle progenitors and define a key role for Pax7 in a non-satellite cell population during postnatal muscle growth.