Regeneration requires surviving cells to mount a response that promotes localized proliferation and repatterning to replace lost and damaged tissue. In Drosophila, the larval imaginal discs regenerate through the formation of a blastema, a zone of localized cell proliferation and increased cellular plasticity. Many important processes during regeneration occur in small subpopulations of cells, the study of which has been revolutionized by single-cell technologies. By profiling the transcriptomes of thousands of individual cells from developing and regenerating imaginal discs, we have identified regeneration-specific transcriptional programs and unique cellular states, including two distinct cell populations within the blastema. These regeneration-specific cell states are characterized by the upregulation of a myriad of genes encoding secreted proteins that establish the pro-regenerative microenvironment. The transcription factor Ets21C is specifically expressed during regeneration in this regenerative secretory zone, and we have demonstrated that Ets21C controls the expression of multiple regeneration-promoting genes, including Mmp1, Ilp8, upd3, and asperous. While eliminating Ets21C function has no discernible effect on development, it severely compromises regeneration. Regenerating tissues in Ets21C-/- mutants fail to maintain a less differentiated blastema and to pause tissue-wide transcriptional changes. As a result, regenerative growth terminates prematurely. Thus, the Ets21C-controlled transcriptional program within the blastema cells is required to effectively coordinate a regenerative response. We also find that this Ets21C-dependent gene regulatory network is activated in small populations of blastema-like cells in tumorous discs, suggesting that pro-regenerative mechanisms can be co-opted by tumors to promote aberrant growth. Our findings highlight unappreciated heterogeneity within the imaginal disc blastema, reveal a critical regenerative gene regulatory network orchestrated by Ets21C, and suggest that this gene regulatory network might function in subpopulations of cells to organize both regenerative and tumorous growth.