OBJECTIVE: Adipose fibrosis signifies pathological remodeling of white adipose tissue (WAT) associated with insulin resistance, diabetes, and cardiovascular disease. Matrix Gla protein (MGP) balances bone morphogenetic protein (BMP) and transforming growth factor β (TGFβ) signaling but has an unclear role in WAT. METHODS: To study the role of MGP in WAT, we used mice with global or platelet-derived growth factor receptor α (Pdgfra)-Cre-mediated Mgp deletion in adipose progenitor cells (APCs) together with single cell RNA sequencing (scRNA-seq), characterization on adipose and fibrotic phenotypes, and BMP and TGFβ signaling studies. RESULTS: Our results showed that Mgp deletion promotes fibrosis and impairs adipogenesis in mice with global or Pdgfra-Cre-mediated Mgp deletion in APCs. ScRNA-seq showed two new adipose-derived stem cells (ASC) populations, ASC1 and ASC4, emerging after Mgp deletion. Trajectory analysis found that ASC1 and ASC4 were derived from ASC2, which normally undergo adipogenesis but instead had diverted to fibrogenic differentiation. All three ASCs expressed Pdgfra and dipeptidyl peptidase-4 (Dpp4). Inhibition of TGFβ signaling or DPP4 activity in mice with Pdgfra-Cre-mediated Mgp deletion reduced the size of the PDGFRα+; DPP4+ cell population and rescued the WAT from unwanted fibrosis. CONCLUSIONS: MGP is essential for appropriate balance between adipogenic differentiation and fibroblast activation. Dysregulation of PDGFRα+; DPP4+ cells may signal early adipose fibrosis.