The cellular origins from which most tumors arise are poorly defined, especially in mesenchymal neoplasms. Aggressive fibromatosis, also known as desmoid tumor, is a locally invasive soft tissue tumor that has mesenchymal characteristics. We found that aggressive fibromatosis tumors express genes and cell surface markers characteristic of mesenchymal stem cells (MSC). In mice that are genetically predisposed to develop aggressive fibromatosis tumors (Apc(wt/1638N)), we found that the number of tumors formed was proportional to the number of MSCs present. Sca-1(-/-) mice, which develop fewer MSCs, were crossed with Apc(wt/1638N) mice. Doubly mutant mice deficient in Sca-1 developed substantially fewer aggressive fibromatosis tumors than wild-type (WT) littermates, but Sca-1 deficiency had no effect on the formation of epithelial-derived intestinal polyps. MSCs isolated from Apc(wt/1638N) mice (or mice expressing a stabilized form of β-catenin) induced aberrant cellular growth reminiscent of aggressive fibromatosis tumors after engraftment to immunocompromised mice, but WT cells and mature fibroblasts from the same animals did not. Taken together, our findings indicate that aggressive fibromatosis is derived from MSCs, and that β-catenin supports tumorigenesis by maintaining mesenchymal progenitor cells in a less differentiated state. Protecting this progenitor cell population might prevent tumor formation in patients harboring a germline APC mutation, where fibromatosis is currently the leading cause of mortality.