Chronic injury to the kidney causes kidney fibrosis with irreversible loss of functional renal parenchyma and leads to the clinical syndromes of chronic kidney disease (CKD) and end-stage renal disease (ESRD). Regardless of the type of initial injury, kidney disease progression follows the same pathophysiologic processes characterized by interstitial fibrosis, capillary rarefaction, and tubular atrophy. Myofibroblasts play a pivotal role in fibrosis by driving excessive extracellular matrix deposition. Targeting these cells in order to prevent the progression of CKD is a promising therapeutic strategy; however, the cellular source of these cells is still controversial. In recent years, a growing amount of evidence points to resident mesenchymal cells such as pericytes and perivascular fibroblasts, which form extensive networks around the renal vasculature, as major contributors to the pool of myofibroblasts in renal fibrogenesis. Identifying the cellular origin of myofibroblasts and the key regulatory pathways that drive myofibroblast proliferation and transdifferentiation as well as capillary rarefaction is the first step to developing novel anti-fibrotic therapeutics to slow or even reverse CKD progression and ultimately to reduce the prevalence of ESRD. This review will summarize recent findings and controversies concerning the cellular source of myofibroblasts and will highlight discoveries defining the key regulatory signaling pathways that drive their expansion and progression in CKD.