Decapitated Hydra regenerate their heads via morphallaxis, i.e., without significant contributions made by cell proliferation or interstitial stem cells. Indeed, Hydra depleted of interstitial stem cells regenerate robustly, and Wnt3 from epithelial cells triggers head regeneration. However, we find a different mechanism controlling regeneration after midgastric bisection in animals equipped with both epithelial and interstitial cell lineages. In this context, we see rapid induction of apoptosis and Wnt3 secretion among interstitial cells at the head- (but not foot-) regenerating site. Apoptosis is both necessary and sufficient to induce Wnt3 production and head regeneration, even at ectopic sites. Further, we identify a zone of proliferation beneath the apoptotic zone, reminiscent of proliferative blastemas in regenerating limbs and of compensatory proliferation induced by dying cells in Drosophila imaginal discs. We propose that different types of injuries induce distinct cellular modes of Hydra head regeneration, which nonetheless converge on a central effector, Wnt3.