Introduction: Mesenchymal progenitor cells (MPCs), such as myoblasts and fibroadipogenic progenitors (FAPs), and their communications with each other and with immune and vascular cells are responsible for muscle maintenance and regeneration. We hypothesize that in diabetes, loss of muscle mass after induction of hind limb ischemia is mediated by reduction in myoblast proliferation, thereby impairing muscle regeneration. Methods: Ischemic injury was induced in male diabetic (Akita) and littermate Wild Type (WT) mice via unilateral femoral artery ligation (FAL). Gastrocnemius muscle was collected at baseline, 3 and 7 days after surgery for single-cell RNA sequencing (scRNA seq). We identified the different cell populations in clusters, determined differentially-expressed genes, utilized Reactome Pathway Analysis and analyzed the cell cycle progression status and cell-cell interactions. Results: scRNA seq analysis of diabetic mice muscle, but not WT muscle, showed a reduction in MPCs, myoblasts and fibroadipogenic progenitors (FAPs) at 3 days post-FAL vs. baseline. FAPs were identified as two distinct subclusters; FAPs/Lum+ (associated with cell cycle regulation) and FAPs/Prg4+ (associated with extracellular matrix remodeling). We observed a lack of pathways involved in cell cycle progression in myoblasts at 3 days post- FAL in diabetic vs. WT muscle. At day 7 post-FAL, we observed an increased number of cell cycle pathways vs. day 3 post-FAL in diabetic muscle, implying a delayed response in the myoblasts. Cell cycle progression analysis revealed fewer diabetic myoblasts in S/G2M phase, with lower expression of proliferation markers (Mki67, Top2a, Mcm6 and Pcna), but no significant differences were observed in FAP/Lum+ cells. Cell-cell interaction analysis at day 3 post-FAL revealed fewer FAP-myoblast interactions in diabetic muscle, while interactions between either FAPs/myoblasts and myeloid cells were higher. Conclusion: These findings suggest that understanding the network of inter-cellular communications among MPCs, immune and vascular cells, and their roles in reduced myoblast proliferation after ischemia, is critical to identify new therapies to stimulate regeneration in diabetes and peripheral vascular disease.