Across different niches, subsets of highly functional stem cells are maintained in a relatively dormant rather than proliferative state. Our understanding of proliferative dynamics in tissue-specific stem cells during conditions of increased tissue turnover remains limited. Using a TetO-H2B-GFP reporter of proliferative history, we identify skeletal muscle stem cell, or satellite cells, that retain (LRC) or lose (nonLRC) the H2B-GFP label. We show in mice that LRCs and nonLRCs are formed at birth and persist during postnatal growth and adult muscle repair. Functionally, LRCs and nonLRCs are born equivalent and transition during postnatal maturation into distinct and hierarchically organized subsets. Adult LRCs give rise to LRCs and nonLRCs; the former are able to self-renew, whereas the latter are restricted to differentiation. Expression analysis revealed the CIP/KIP family members p21cip1 (Cdkn1a) and p27kip1 (Cdkn1b) to be expressed at higher levels in LRCs. In accordance with a crucial role in LRC fate, loss of p27kip1 promoted proliferation and differentiation of LRCs in vitro and impaired satellite cell self-renewal after muscle injury. By contrast, loss of p21cip1 only affected nonLRCs, in which myogenic commitment was inhibited. Our results provide evidence that restriction of self-renewal potential to LRCs is established early in life and is maintained during increased tissue turnover through the cell cycle inhibitor p27kip1. They also reveal the differential role of CIP/KIP family members at discrete steps within the stem cell hierarchy.