Only a few specific chemokines that mediate interactions between inflammatory and satellite cells in muscle regeneration have been identified. The chemokine CXCL16 differs from other chemokines because it has both a transmembrane region and active, soluble chemokine forms. Indeed, we found increased expression of CXCL16 and its receptor, CXCR6, in regenerating myofibers. Muscle regeneration in CXCL16-deficient (CXCL16KO) mice was severely impaired compared with regeneration in wild-type mice. In addition, there was decreased MyoD and myogenin expression in regenerating muscle in CXCL16KO mice, indicating impaired satellite cell proliferation and differentiation. After 1 month, new myofibers in CXCL16KO mice remained significantly smaller than those in muscle of wild-type mice. To understand how CXCL16 regulates muscle regeneration, we examined cells infiltrating injured muscle. There were more infiltrating neutrophils and fewer macrophages in injured muscle of CXCL16KO mice compared with events in wild-type mice. Moreover, absence of CXCL16 led to different expression of cytokines/chemokines in injured muscles: mRNAs of macrophage-inflammatory protein (MIP)-1alpha, MIP-1beta, and MIP-2 were increased, whereas regulated on activation normal T cell expressed and secreted, T-cell activation-3, and monocyte chemoattractant protein-1 mRNAs were lower compared with results in muscles of wild-type mice. Impaired muscle regeneration in CXCL16KO mice also resulted in fibrosis, which was linked to transforming growth factor-beta1 expression. Thus, CXCL16 expression is a critical mediator of muscle regeneration, and it suppresses the development of fibrosis.