Skeletal muscle satellite cells are adult stem cells responsible for postnatal skeletal muscle growth and regeneration. Paired-box transcription factor Pax7 plays a central role in satellite cell survival, self-renewal, and proliferation. However, how Pax7 is regulated during the transition from proliferating satellite cells to differentiating myogenic progenitor cells is largely unknown. In this study, we find that miR-1 and miR-206 are sharply up-regulated during satellite cell differentiation and down-regulated after muscle injury. We show that miR-1 and miR-206 facilitate satellite cell differentiation by restricting their proliferative potential. We identify Pax7 as one of the direct regulatory targets of miR-1 and miR-206. Inhibition of miR-1 and miR-206 substantially enhances satellite cell proliferation and increases Pax7 protein level in vivo. Conversely, sustained Pax7 expression as a result of the loss of miR-1 and miR-206 repression elements at its 3' untranslated region significantly inhibits myoblast differentiation. Therefore, our experiments suggest that microRNAs participate in a regulatory circuit that allows rapid gene program transitions from proliferation to differentiation.