The cardiac microenvironment includes cardiomyocytes, fibroblasts and macrophages, which regulate remodeling after myocardial infarction (MI). Targeting this microenvironment is a novel therapeutic approach for MI. We found that the natural compound derivative, BIO ((2'Z,3'E)-6-Bromoindirubin-3'-oxime) modulated the cardiac microenvironment to exert a therapeutic effect on MI. Using a series of co-culture studies, BIO induced proliferation in cardiomyocytes and inhibited proliferation in cardiac fibroblasts. BIO produced multiple anti-fibrotic effects in cardiac fibroblasts. In macrophages, BIO inhibited the expression of pro-inflammatory factors. Significantly, BIO modulated the molecular crosstalk between cardiac fibroblasts and differentiating macrophages to induce polarization to the anti-inflammatory M2 phenotype. In the optically transparent zebrafish-based heart failure model, BIO induced cardiomyocyte proliferation and completely recovered survival rate. BIO is a known glycogen synthase kinase-3β inhibitor, but these effects could not be recapitulated using the classical inhibitor, lithium chloride; indicating novel therapeutic effects of BIO. We identified the mechanism of BIO as differential modulation of p27 protein expression and potent induction of anti-inflammatory interleukin-10. In a rat MI model, BIO reduced fibrosis and improved cardiac performance. Histological analysis revealed modulation of the cardiac microenvironment by BIO, with increased presence of anti-inflammatory M2 macrophages. Our results demonstrate that BIO produces unique effects in the cardiac microenvironment to promote recovery post-MI.