Injury is common in the life of organisms. Because the extent of damage cannot be predicted, injured organisms must determine how much tissue needs to be restored. Although it is known that amputation position affects the regeneration speed of appendages, mechanisms conveying positional information remain unclear. We investigated tissue dynamics in regenerating caudal fins of the African killifish (Nothobranchius furzeri) and found position-specific, differential spatial distribution modulation, persistence, and magnitude of proliferation. Single-cell RNA sequencing revealed a transient regeneration-activated cell state (TRACS) in the basal epidermis that is amplified to match a given amputation position and expresses components and modifiers of the extracellular matrix (ECM). Notably, CRISPR-Cas9-mediated deletion of the ECM modifier sequestosome 1 (sqstm1) increased the regenerative capacity of distal injuries, suggesting that regeneration growth rate can be uncoupled from amputation position. We propose that basal epidermis TRACS transduce positional information to the regenerating blastema by remodeling the ECM. Display omitted •Amputation position changes tissue-wide proliferation response•Regeneration deploys transient regeneration-activated cell states•Sqstm1 slows down regenerative outgrowth in distal injuries•Prediction: positional information is transduced by ECM changes during regeneration Biological sciences; Zoology; Molecular biology; Cell biology