Heterogeneity of stem cells or their niches is likely to influence tissue regeneration. Here we reveal stem/precursor cell diversity during wound repair in larval zebrafish somitic body muscle using time-lapse 3D confocal microscopy on reporter lines. Skeletal muscle with incision wounds rapidly regenerates both slow and fast muscle fibre types. A swift immune response is followed by an increase in cells at the wound site, many of which express the muscle stem cell marker Pax7. Pax7(+) cells proliferate and then undergo terminal differentiation involving Myogenin accumulation and subsequent loss of Pax7 followed by elongation and fusion to repair fast muscle fibres. Analysis of pax7a and pax7b transgenic reporter fish reveals that cells expressing each of the duplicated pax7 genes are distinctly localized in un-injured larvae. Cells marked by pax7a only or by both pax7a and pax7b enter the wound rapidly and contribute to muscle wound repair, but each behaves differently. Low numbers of pax7a-only cells form nascent fibres. Time-lapse microscopy revealed that the more numerous Pax7b-marked cells frequently fuse to pre-existing fibres, contributing more strongly than pax7a-only cells to repair of damaged fibres. Pax7b-marked cells are more often present in rows of aligned cells that are observed to fuse into a single fibre, but more rarely contribute to nascent regenerated fibres. Ablation of a substantial portion of nitroreductase-expressing pax7b cells with metronidazole prior to wounding triggered rapid pax7a-only cell accumulation, but this neither inhibited nor augmented pax7a-only cell derived myogenesis and thus altered the cellular repair dynamics during wound healing. Moreover, pax7a-only cells did not regenerate pax7b cells, suggesting a lineage distinction. We propose a modified founder cell/fusion competent cell model in which pax7a-only cells initiate fibre formation and pax7b cells contribute to fibre growth. This novel cellular complexity in muscle wound repair raises the possibility that distinct populations of myogenic cells contribute differentially to repair in other vertebrates.