Human endometrium undergoes cyclic regeneration involving stem/progenitor cells, but the role of resident endometrial mesenchymal stem cells (eMSC) as progenitors of endometrial stromal fibroblasts (eSF) has not been definitively demonstrated. In endometriosis, eSF display progesterone (P4) resistance with impaired decidualization in vivo and in vitro. To investigate eMSC as precursors of eSF and whether endometriosis P4 resistance is inherited from eMSC, we analyzed transcriptomes of eutopic endometrium eMSC and eSF isolated by fluorescence-activated cell sorting (FACS) from endometriosis (eMSCendo, eSFendo) and controls (eMSCcontrol, eSFcontrol) and their derived primary cultures. Differentially expressed lineage-associated genes (LG) of FACS-isolated eMSC and eSF were largely conserved in endometriosis. In culture, eSFcontrol maintained in vitro expression of a subset of eSF LG and decidualized in vitro with P4 The eMSCcontrol cultures differentiated in vitro to eSF lineage, down-regulating eMSC LG and up-regulating eSF LG, showing minimal transcriptome differences versus eSFcontrol cultures and decidualizing in vitro. Cultured eSFendo displayed less in vitro LG stability and did not decidualize in vitro. In vitro, eMSCendo differentiated to eSF lineage but showed more differentially expressed genes versus eSFendo cultures, and did not decidualize in vitro, demonstrating P4 resistance inherited from eMSCendo Compared to controls, cultures from tissue-derived eSFendo uniquely had a pro-inflammatory phenotype not present in eMSCendo differentiated to eSF in vitro, suggesting divergent niche effects for in vivo versus in vitro lineage differentiation. These findings substantiate eMSC as progenitors of eSF and reveal eSF in endometriosis as having P4 resistance inherited from eMSC and a pro-inflammatory phenotype acquired within the endometrial niche.