Remarkable plasticity of stem cells endows them with the ability to adapt quickly to ever-changing niches throughout a lifetime by reprogramming their metabolism and function. Upon sensing environmental challenges and following intrinsic genetic programs, rapidly proliferating progenitor cells during early postnatal development rewire their metabolic program to convert into quiescent somatic stem cells for lifelong tissue homeostasis. The molecular switch controlling this stem cell fate conversion is still obscure. Here we show that neonatal mesenchymal stem/progenitor cells (nMSCs) exhibit robust stem cell activity with higher proliferation and multilineage differentiation potential than adult MSCs (aMSC). The functional robustness of nMSCs requires peroxisome proliferator-activated receptor-gamma coactivator-1α (Pgc-1α)-mediated oxidative phosphorylation (OxPhos) as the metabolic switch which is turned off in aMSCs. The cell fate conversion between nMSCs and aMSCs by the Pgc-1α-OxPhos switch is regulated by octamer-binding transcription factor-4 (Oct-4) which directly binds to the Pgc-1α promoter and induces the promoter activity. The failure to flick on the metabolic switch by deleting Pgc-1α in nMSCs impedes normal craniofacial growth and development. By studying stem cells in perinatal transition, these findings underscore the importance of precise metabolic control of stem cell function to support the life-stage-specific roles of stem cells during craniofacial development and homeostasis. Based on the newly identified mechanism, this study will improve our understanding of stem cell evolution processes and will define a novel metabolic switch to improve stem-cell-based craniofacial tissue regeneration.