The present paper links the representation theory of Lie groupoids and infinite-dimensional Lie groups. We show that smooth representations of Lie groupoids give rise to smooth representations of associated Lie groups. The groups envisaged here are the bisection group and a group of groupoid self maps. Then representations of the Lie groupoids give rise to representations of the infinite-dimensional Lie groups on spaces of (compactly supported) bundle sections. Endowing the spaces of bundle sections with a fine Whitney type topology, the fine very strong topology, we even obtain continuous and smooth representations. It is known that in the topological category, this correspondence can be reversed for certain topological groupoids. We extend this result to the smooth category under weaker assumptions on the groupoids.
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