Skeletal muscle regeneration requires resident muscle stem cells, termed satellite cells (SCs). SCs are largely quiescent during homeostasis yet become activated upon injury to supply myonuclei and self-renewed SCs. Molecular mechanisms underlying the competence of SCs to proliferate and self-renew in response to injury remain unclear. Here, we show that CREB activity establishes proliferative potential during SC quiescence. SCs with inhibited CREB activity remain quiescent and positioned in their niche, but upon injury, they cannot enter or maintain a proliferative state for expansion and self-renewal. We demonstrate mechanistically that Mpp7 is a CREB target and its functional mediator. MPP7 loss affects the level and sub-cellular localization of AMOT and YAP1 in quiescent SCs. Furthermore, MPP7 and AMOT are required for YAP1 nuclear accumulation, and the three are individually required for a proliferative state in myoblasts. We propose that the CREB-MPP7-AMOT-YAP1 axis establishes the competence of quiescent SCs to expand and self-renew, thereby preserving stem cell function.