Satellite cells are tissue-specific stem cells critical for skeletal muscle growth and regeneration. Upon exposure to appropriate stimuli, satellite cells produce progeny myoblasts. Heterogeneity within a population of myoblasts ensures that a subset of myoblasts readily differentiate to form myotubes, whereas other myoblasts remain undifferentiated and thus available for future muscle growth. The mechanisms that contribute to this heterogeneity in myoblasts are largely unknown. We show that satellite cells are Sca-1^neg but give rise to myoblasts that are heterogeneous for sca-1 expression. The majority of myoblasts are sca-1^neg, rapidly divide, and are capable of undergoing myogenic differentiation to form myotubes. In contrast, a minority population is sca-1^pos, divides slower, and does not readily form myotubes. Sca-1 expression is not static but rather dynamically modulated by the microenvironment. Gain-of-function and loss-of-function experiments demonstrate that sca-1 has a functional role in regulating proliferation and differentiation of myoblasts. Myofiber size of sca-1 null muscles is altered in an age-dependent manner, with increased size observed in younger mice and decreased size in older mice. These studies reveal a novel system that reversibly modulates the myogenic behavior of myoblasts. These studies provide evidence that, rather than being a fixed property, myoblast heterogeneity can be modulated by the microenvironment.