Significant numbers of macrophages are present during all stages of dermal wound repair, but the functional significance of these macrophages, especially during the later contraction and remodelling stages of repair, remains unclear. We investigated the effect of macrophages on wound contraction using a novel in vitro model based upon the contracting dermal equivalent (DE). Macrophages were found to reversibly restrain DE contraction, a rapid and sustained effect that was enhanced by lipolysaccharide (LPS) treatment of macrophages and partially inhibited by hydrocortisone. Prolonged inhibition of contraction was strongly correlated with an inhibition of fibroblast proliferation. The rapid contraction-inhibiting effect of the macrophages was mediated through activation of protein kinase C (PKC). These results suggest that inflammatory macrophages restrain the later stages of wound repair, namely matrix contraction and remodeling. The novel in vitro model established here provides a useful system for examining fibroblast-macrophage interactions in the healing wound.