The musculoskeletal system is a striking example of how cell identity and position is coordinated across multiple tissues to ensure function. However, it is unclear upon tissue loss, such as complete loss of cells of a central musculoskeletal connecting tendon, whether neighboring tissues harbor progenitors capable of mediating regeneration. Here, using a zebrafish model, we genetically ablate all embryonic tendon cells and find complete regeneration of tendon structure and pattern. We identify two regenerative progenitor populations, sox10+ perichondrial cells surrounding cartilage and nkx2.5+ cells surrounding muscle. Surprisingly, laser ablation of sox10+ cells, but not nkx2.5+ cells, increases tendon progenitor number in the perichondrium, suggesting a mechanism to regulate attachment location. We find BMP signaling is active in regenerating progenitor cells and is necessary and sufficient for generating new scxa+ cells. Our work shows that muscle and cartilage connective tissues harbor progenitor cells capable of fully regenerating tendons, and this process is regulated by BMP signaling.