Wound healing is regulated by a complex series of events and overlapping phases. A delicate balance of cytokines and mediators in tissue repair is required for optimal therapy in clinical applications. Molecular imaging technologies, with their versatility in monitoring cellular and molecular events in living organisms, offer tangible options to better guide tissue repair by regulating the balance of cytokines and mediators at injured sites. A murine cutaneous wound healing model was developed to investigate if incorporation of prostaglandin E (PGE) into chitosan (CS) hydrogel (CS+PGE hydrogel) could enhance its therapeutic effects. Bioluminescence imaging (BLI) was used to noninvasively monitor the inflammation and angiogenesis processes at injured sites during wound healing. We also investigated the M1 and M2 paradigm of macrophage activation during wound healing. CS hydrogel could prolong the release of PGE, thereby improving its tissue repair and regeneration capabilities. Molecular imaging results showed that the prolonged release of PGE could ameliorate inflammation by promoting the M2 phenotypic transformation of macrophages. Also, CS+PGE hydrogel could augment angiogenesis at the injured sites during the early phase of tissue repair, as revealed by BLI. Furthermore, our results demonstrated that CS+PGE hydrogel could regulate the balance among the three overlapping phases-inflammation, regeneration (angiogenesis), and remodeling (fibrosis)-during cutaneous wound healing. Our findings highlight the potential of the CS+PGE hydrogel as a novel therapeutic strategy for promoting tissue regeneration via M2 macrophage polarization. Moreover, molecular imaging provides a platform for monitoring cellular and molecular events in real-time during tissue repair and facilitates the discovery of optimal therapeutics for injury repair by regulating the balance of cytokines and mediators at injured sites.