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Fibrosis is a major health burden across diseases and organs. To remedy this, we study wound‐induced hair follicle neogenesis (WIHN) as a model of non‐fibrotic healing that recapitulates embryogenesis for de novo hair follicle morphogenesis after wounding. We previously demonstrated that TLR3 promotes WIHN through binding wound‐associated dsRNA, the source of which is still unclear. Here, we find that multiple distinct contexts of high WIHN all show a strong neutrophil signature. Given the correlation between neutrophil infiltration and endogenous dsRNA release, we hypothesized that neutrophil extracellular traps (NETs) likely release nuclear spliceosomal U1 dsRNA and modulate WIHN. However, rather than enhance regeneration, we find mature neutrophils inhibit WIHN such that mice with mature neutrophil depletion exhibit higher WIHN. Similarly, Pad4 null mice, which are defective in NET production, show augmented WIHN. Finally, using single‐cell RNA sequencing, we identify a dramatic increase in mature and activated neutrophils in the wound beds of low regenerating Tlr3−/− mice. Taken together, these results demonstrate that although mature neutrophils are stimulated by a common pro‐regenerative cue, their presence and NETs hinder regeneration.