Duchenne muscular dystrophy (DMD) is the most common, lethal, muscle-wasting disease of childhood. Previous investigations have shown that muscle macrophages may play an important role in promoting the pathology in the mdx mouse model of DMD. In the present study, we investigate the mechanism through which macrophages promote mdx dystrophy and assess whether the phenotype of the macrophages changes between the stage of peak muscle necrosis (4 weeks of age) and muscle regeneration (12 weeks). We find that 4-week-old mdx muscles contain a population of pro-inflammatory, classically activated M1 macrophages that lyse muscle in vitro by NO-mediated mechanisms. Genetic ablation of the iNOS gene in mdx mice also significantly reduces muscle membrane lysis in 4-week-old mdx mice in vivo. However, 4-week mdx muscles also contain a population of alternatively activated, M2a macrophages that express arginase. In vitro assays show that M2a macrophages reduce lysis of muscle cells by M1 macrophages through the competition of arginase in M2a cells with iNOS in M1 cells for their common, enzymatic substrate, arginine. During the transition from the acute peak of mdx pathology to the regenerative stage, expression of IL-4 and IL-10 increases, either of which can deactivate the M1 phenotype and promote activation of a CD163+, M2c phenotype that can increase tissue repair. Our findings further show that IL-10 stimulation of macrophages activates their ability to promote satellite cell proliferation. Deactivation of the M1 phenotype is also associated with a reduced expression of iNOS, IL-6, MCP-1 and IP-10. Thus, these results show that distinct subpopulations of macrophages can promote muscle injury or repair in muscular dystrophy, and that therapeutic interventions that affect the balance between M1 and M2 macrophage populations may influence the course of muscular dystrophy.