Duchenne muscular dystrophy (DMD) is a muscle wasting disease in which inflammation influences the severity of pathology. We found that the onset of muscle inflammation in the mdx mouse model of DMD coincides with large increases in expression of pro-inflammatory cytokines [tumor necrosis factor-α (TNFα); interferon gamma (IFNγ)] and dramatic reductions of the pro-myogenic protein Klotho in muscle cells and large increases of Klotho in pro-regenerative, CD206+ macrophages. Furthermore, TNFα and IFNγ treatments reduced Klotho in muscle cells and increased Klotho in macrophages. Because CD206+/Klotho+ macrophages were concentrated at sites of muscle regeneration, we tested whether macrophage-derived Klotho promotes myogenesis. Klotho transgenic macrophages had a pro-proliferative influence on muscle cells that was ablated by neutralizing antibodies to Klotho and conditioned media from Klotho mutant macrophages did not increase muscle cell proliferation in vitro. In addition, transplantation of bone marrow cells from Klotho transgenic mice into mdx recipients increased numbers of myogenic cells and increased the size of muscle fibers. Klotho also acted directly on macrophages, stimulating their secretion of TNFα. Because TNFα is a muscle mitogen, we tested whether the pro-proliferative effects of Klotho on muscle cells were mediated by TNFα and found that increased proliferation caused by Klotho was reduced by anti-TNFα. Collectively, these data show that pro-inflammatory cytokines contribute to silencing of Klotho in dystrophic muscle, but increase Klotho expression by macrophages. Our findings also show that macrophage-derived Klotho can promote muscle regeneration by expanding populations of muscle stem cells and increasing muscle fiber growth in dystrophic muscle.