Metabolic health depends on the capacity of adipose tissue progenitor cells to undergo de novo adipogenesis. The cellular hierarchy and mechanisms governing adipocyte progenitor differentiation are incompletely understood. Through single-cell RNA sequence analyses, we show that the lineage hierarchy of adipocyte progenitors consists of distinct mesenchymal cell types that are present in both mouse and human adipose tissues. Cells marked by dipeptidyl peptidase-4 (DPP4)/CD26 expression are highly proliferative, multipotent progenitors. During the development of subcutaneous adipose tissue in mice, these progenitor cells give rise to intercellular adhesion molecule-1 (ICAM1)/CD54-expressing (CD54+) committed preadipocytes and a related adipogenic cell population marked by Clec11a and F3/CD142 expression. Transforming growth factor-b maintains DPP4+ cell identity and inhibits adipogenic commitment of DPP4+ and CD142+ cells. Notably, DPP4+ progenitors reside in the reticular interstitium, a recently appreciated fluid-filled space within and between tissues, including adipose depots.