Hair follicle development and growth are regulated by Wnt signalling and depend on interactions between epidermal cells and a population of fibroblasts at the base of the follicle, known as the dermal papilla (DP). DP cells have a distinct gene expression signature from non-DP dermal fibroblasts. However, their origins are largely unknown. By generating chimeric mice and performing skin reconstitution assays we show that, irrespective of whether DP form during development, are induced by epidermal Wnt activation in adult skin or assemble from disaggregated cells, they are polyclonal in origin. While fibroblast proliferation is necessary for hair follicle formation in skin reconstitution assays, mitotically inhibited cells readily contribute to DP. Although new hair follicles do not usually develop in adult skin, adult dermal fibroblasts are competent to contribute to DP during hair follicle neogenesis, irrespective of whether they originate from skin in the resting or growth phase of the hair cycle or skin with β-catenin-induced ectopic follicles. We propose that during skin reconstitution fibroblasts may be induced to become DP cells by interactions with hair follicle epidermal cells, rather than being derived from a distinct subpopulation of cells.