Chronic wounds are the outcome of an imbalanced inflammatory response caused by sustenance of immune microenvironment. In this context, tissue engineered graft played great role in healing wounds but faced difficulty in scar remodelling, immune rejection and poor vascularization. All the limitations faced are somewhere linked with the immune cells involved in healing. In this consideration, immunomodulatory biomaterials bridge a large gap with the delivery of modulating factors for triggering key inflammatory cells responsible towards interplay in the wound micro-environment. Inherent physico-chemical properties of biomaterials substantially determine the nature of cell-materials interaction thereby facilitating differential cytokine gradient involved in activation or suppression of inflammatory signalling pathways, and followed by surface marker expression. This review aims to systematically describe the interplay of immune cells involved in different phases in the wound microenvironment and biomaterials. Additionally, it also focuses on modulating innate immune cell responses in the context of triggering the halted phase of the wound healing, i.e., inflammatory phase. The various strategies are highlighted for modulation of wound microenvironment towards wound regeneration including stem cells, cytokines, growth factors, vitamins, and anti-inflammatory agents to induce interactive ability of biomaterials with immune cells. The last section focuses on prospective approaches and current potential strategies for wound regeneration. This includes the development of different models to bridge the gap between mouse models and human patients. Emerging new tools to study inflammatory response owing to biomaterials and novel strategies for modulation of monocyte and macrophage behaviour in the wound environment are also discussed.