Zebrafish regenerate their fins which involves a component of cell plasticity. It is currently unclear how regenerate cells divide labor to allow for appropriate growth and patterning. Here, we studied lineage relationships of fluorescence-activated cell sorting-enriched epidermal, bone-forming (osteoblast), and (non-osteoblast) blastemal fin regenerate cells by single-cell RNA sequencing, lineage tracing, targeted osteoblast ablation, and electron microscopy. Most osteoblasts in the outgrowing regenerate derive from osterix+ osteoblasts, while mmp9+ cells reside at segment joints. Distal blastema cells contribute to distal osteoblast progenitors, suggesting compartmentalization of the regenerating appendage. Ablation of osterix+ osteoblasts impairs segment joint and bone matrix formation and decreases regenerate length which is partially compensated for by distal regenerate cells. Our study characterizes expression patterns and lineage relationships of rare fin regenerate cell populations, indicates inherent detection and compensation of impaired regeneration, suggests variable dependence on growth factor signaling, and demonstrates zonation of the elongating fin regenerate.