All-trans Retinoic acid (RA) and its derivatives are potent therapeutics for immunological functions including wound repair. However, the molecular mechanism of RA modulation in innate immunity is poorly understood, especially in macrophages. We found that topical application of RA significantly improves wound healing and that RA and IL-4 synergistically activate Arg1, a critical gene for tissue repair, in M2 polarized macrophages. This involves feed forward regulation of Raldh2, a rate-limiting enzyme for RA biosynthesis, and requires Med25 to coordinate RAR, STAT6 and chromatin remodeler, Brg1 to remodel the +1 nucleosome of Arg1 for transcription initiation. By recruiting elongation factor TFIIS, Med25 also facilitates transcriptional initiation-elongation coupling. This study uncovers synergistic activation of Arg1 by RA and IL-4 in M2 macrophages that involves feed forward regulation of RA synthesis and dual functions of Med25 in nucleosome remodeling and transcription initiation-elongation coupling that underlies robust modulatory activity of RA in innate immunity.