Enchytraeus japonensis is a small oligochaete that reproduces mainly asexually by fragmentation (autotomy) and regeneration. As sexual reproduction can also be induced, it is a good animal model for the study of both somatic and germline stem cells. To clarify the features of stem cells in regeneration, we investigated the proliferation and lineage of stem cells in E. japonensis. Neoblasts, which have the morphological characteristics of undifferentiated cells, were found to firmly adhere to the posterior surface of septa in each trunk segment. Also, smaller neoblast-like cells, which are designated as N-cells in this study, were located dorsal to the neoblasts on the septa. By conducting 5-bromo-2′-deoxyuridine (BrdU)-labeling-experiments, we have shown that neoblasts are slow-cycling (or quiescent) in intact growing worms, but proliferate rapidly in response to fragmentation. N-cells proliferate more actively than do neoblasts in intact worms. The results of pulse-chase experiments indicated that neoblast and N-cell lineage mesodermal cells that incorporated BrdU early in regeneration migrated toward the autotomized site to form the mesodermal region of the blastema, while the epidermal and intestinal cells also contributed to the blastema locally near the autotomized site. We have also shown that neoblasts have stem cell characteristics by expressing Ej-vlg2 and by the activity of telomerase during regeneration. Telomerase activity was high in the early stage of regeneration and correlated with the proliferation activity in the neoblast lineage of mesodermal stem cells. Taken together, our results indicate that neoblasts are mesodermal stem cells involved in the regeneration of E. japonensis.