Fracture healing is a unique biologic process starting with an initial inflammatory response. As in other regenerative processes, bone and the immune system interact closely during fracture healing. This project was aimed at further elucidating how the host immune system participates in fracture healing. A standard closed femoral fracture was created in wild‐type (WT) and recombination activating gene 1 knockout (RAG1^−/−) mice lacking the adaptive immune system. Healing was investigated using micro–computed tomography (µCT), biomechanical testing, and histologic and mRNA expression analyses. Biomechanical testing demonstrated a significantly higher torsional moment on days 14 and 21 in the RAG1^−/− mice compared to the WT group. µCT evaluation of RAG1^−/− specimens showed earlier mineralization and remodeling. Histologically, endochondral ossification and remodeling were accelerated in the RAG1^−/− compared with the WT mice. Histomorphometric analysis on day 7 showed a significantly higher fraction of bone and a significantly lower fraction of cartilage in the callus of the RAG1^−/− mice than in the WT mice. Endochondral ossification was accelerated in the RAG1^−/− mice. Lymphocytes were present during the physiologic repair process, with high numbers in the hematoma on day 3 and during formation of the hard callus on day 14 in the WT mice. Expression of inflammatory cytokines was reduced in the RAG1^−/− mice. In contrast, expression of anti‐inflammatory interleukin 10 (IL‐10) was strongly upregulated in RAG1^−/− mice, indicating protective effects. This study revealed an unexpected phenotype of enhanced fracture healing in RAG1^−/− mice, suggesting detrimental functions of lymphocytes on fracture healing. The shift from proinflammatory to anti‐inflammatory cytokines suggests that immunomodulatory intervention strategies that maximise the regenerative and minimize the destructive effects of inflammation may lead to enhanced fracture repair. © 2011 American Society for Bone and Mineral Research.