Matrix metalloproteinase-10 (MMP-10) is expressed by macrophages and epithelium in response to injury, but its functions in wound repair are unknown. We observed increased collagen deposition and skin stiffness in Mmp10^−/− wounds, with no difference in collagen expression or reepithelialization. Increased collagen deposition in Mmp10^−/− wounds was accompanied by less collagenolytic activity and reduced expression of specific metallocollagenases, particularly MMP-8 and MMP-13, where MMP-13 was the key collagenase. Ablation and adoptive transfer approaches and cell-based models demonstrated that the MMP-10-dependent collagenolytic activity was a product of alternatively activated (M2) resident macrophages. These data demonstrate a critical role for macrophage MMP-10 in controlling the tissue remodeling activity of macrophages and moderating scar formation during wound repair.