Tissue homeostasis and regeneration are mediated by programs of adult stem cell renewal and differentiation. However, the mechanisms that regulate stem cell fates under such widely varying conditions are not fully understood. Using single-cell techniques, we assessed the transcriptional changes associated with stem cell self-renewal and differentiation and followed the maturation of stem cell-derived clones using sparse lineage tracing in the regenerating mouse olfactory epithelium. Following injury, quiescent olfactory stem cells rapidly shift to activated, transient states unique to regeneration and tailored to meet the demands of injury-induced repair, including barrier formation and proliferation. Multiple cell fates, including renewed stem cells and committed differentiating progenitors, are specified during this early window of activation. We further show that Sox2 is essential for cells to transition from the activated to neuronal progenitor states. Our study highlights strategies for stem cell-mediated regeneration that may be conserved in other adult stem cell niches.