Extracellular matrix (ECM) is an important component of stem cell niche. Remodelling of ECM mediated by ECM regulators such as MMPs plays a vital role in stem cell function. However, the mechanisms that modulate the function of ECM regulators in the stem cell niche are understudied. Here, we explored the role of the transcription factor (TF), ETS-1 expressed in the cathepsin+ cell population in regulating the expression of the ECM regulator, mt-mmpA, thereby modulating basement membrane thickness. In planarians, the basement membrane around the gut/inner parenchyma is thought to act as a niche for pluripotent stem cells. It has been shown that the early epidermal progenitors migrate outward from this region and progressively differentiate to maintain the terminal epidermis. Our data shows thickening of basement membrane in the absence of ets-1 results in defective migration of stem cells progeny. Furthermore, the absence of ets-1 led to a defective epidermal progenitor landscape, in spite of its lack of expression in those cell types. Together, our results demonstrate the active role of ECM remodelling in regulating tissue homeostasis and regeneration in planaria.