α1-Antichymotrypsin (α1-ACT) is a specific inhibitor of leukocyte-derived chymotrypsin-like proteases with largely unknown functions in tissue repair. By examining human and murine skin wounds, we showed that following mechanical injury the physiological repair response is associated with an acute phase response of α1-ACT and the mouse homologue Spi-2, respectively. In both species, attenuated α1-ACT/Spi-2 activity and gene expression at the local wound site was associated with severe wound healing defects. Topical application of recombinant α1-ACT to wounds of diabetic mice rescued the impaired healing phenotype. LC-MS analysis of α1-ACT cleavage fragments identified a novel cleavage site within the reactive center loop and showed that neutrophil elastase was the predominant protease involved in unusual α1-ACT cleavage and inactivation in nonhealing human wounds. These results reveal critical functions for locally acting α1-ACT in the acute phase response following skin injury, provide mechanistic insight into its function during the repair response, and raise novel perspectives for its potential therapeutic value in inflammation-mediated tissue damage.