Monocytes and macrophages (m) are plastic cells whose functions are governed by microenvironmental cues. Wound fluid bathing the wound tissue reflects the wound microenvironment. Current literature on wound inflammation is primarily based on the study of blood monocyte-derived macrophages, cells that have never been exposed to the wound microenvironment. We sought to compare pair-matched monocyte-derived macrophages with m isolated from chronic wounds of patients. Oncostatin M (OSM) was differentially overexpressed in pair-matched wound m. Both PGE₂ and its metabolite 13,14-dihydro-15-keto-PGE₂ (PGE-M) were abundant in wound fluid and induced OSM in wound-site m. Consistently, induction of OSM mRNA was observed in m isolated from PGE₂-enriched polyvinyl alcohol sponges implanted in murine wounds. Treatment of human THP-1 cell-derived m with PGE₂ or PGE-M caused dose-dependent induction of OSM. Characterization of the signal transduction pathways demonstrated the involvement of EP4 receptor and cAMP signaling. In human m, PGE₂ phosphorylated Axl, a receptor tyrosine kinase (RTK). Axl phosphorylation was also induced by a cAMP analogue demonstrating interplay between the cAMP and RTK pathways. PGE₂-dependent Axl phosphorylation led to AP-1 transactivation, which is directly implicated in inducible expression of OSM. Treatment of human m or mice excisional wounds with recombinant OSM resulted in an anti-inflammatory response as manifested by attenuated expression of endotoxin-induced TNF-α and IL-1β. OSM treatment also improved wound closure during the early inflammatory phase of healing. In summary, this work recognizes PGE₂ in the wound fluid as a potent inducer of m OSM, a cytokine with an anti-inflammatory role in cutaneous wound healing.