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Abstract Studies of appendage regeneration in vertebrates have shown that the fundamental building block of any regenerative tissue is a blastema. The blastema is a cone-shaped accumulation that forms at the site of amputation post wound-healing and is the result of a highly coordinated process involving a cluster of cells capable of growth, migration, and differentiation. Although several key signaling pathways involved in regeneration have been identified, which cellular processes they control and how these processes are coordinated across space and time are not yet fully understood. This study introduces a computational tool to examine how the outgrowth results from the interaction of two tissue layers: the bulk (mesenchyme) and the overlying epithelium. We developed a novel hybrid agent-based modeling framework and an accompanying parameter inference pipeline to uncover the cellular properties in the epithelium and the mesenchyme driving the formation of a normal regenerative blastema with a morphology similar to that observed in experiments. Using our model, we report two conditions for blastema formation: retained local softening of the epithelial layer at the site of injury, which was confirmed experimentally with atomic force microscopy (AFM) measurements, and the involvement of the Wnt signaling pathway in the directed migration of mesenchyme cells towards the distal tip. Taken together, this combined experimental-theoretical approach provides a framework for understanding how the Wnt signaling pathway influences the formation of the early blastema at multiple levels of organization and how key cellular behaviors contribute to its formation. Author Summary A small number of tetrapods have retained the ancestral ability to regenerate tissues and even limbs. Indifferent of species or tissue, the decisive initial stage of limb regeneration is the formation of a specialized structure called the blastema, a heterogeneous mass of mesenchymal cells, in a relatively short timescale of 2-14 days post injury or amputation. To study the mechanical and cellular conditions for limb blastema formation in the axolotl model organism, we developed a novel hybrid agent-based modeling framework and accompanying kinetic parameter inference pipeline. By recapitulating blastema morphometrics of healthy and stalled regenerative states, our model finds two conditions for blastema formation: retained local softening of the epithelial layer at the injury site post wound-healing, which we confirmed with atomic force microscopy measurements, and that the Wnt signaling pathway plays a role in the migration of mesenchyme cells to the distal tip in order to produce the blastema.