Macrophages play a critical role in the innate immune response. To respond in a rapid and efficient manner to challenges in the micro-environment, macrophages are able to differentiate towards classically (M1) or alternatively (M2) activated phenotypes. Synthetic, innate defense regulators (IDR) peptides, designed based on natural host defence peptides, have enhanced immunomodulatory activities and reduced toxicity leading to protection in infection and inflammation models that is dependent on innate immune cells like monocytes/macrophages. Here we tested the effect of IDR-1018 on macrophage differentiation, a process essential to macrophage function and the immune response. Using transcriptional, protein and systems biology analysis, we observed that differentiation in the presence of IDR-1018 induced a unique signature of immune responses including the production of specific pro and anti-inflammatory mediators, expression of wound healing associated genes, and increased phagocytosis of apoptotic cells. Transcription factor IRF4 appeared to play an important role in promoting this IDR-1018-induced phenotype. The data suggests that IDR-1018 drives macrophage differentiation towards an intermediate M1-M2 state, enhancing anti-inflammatory functions while maintaining certain pro-inflammatory activities important to the resolution of infection. Synthetic peptides like IDR-1018, which act by modulating the immune system, could represent a powerful new class of therapeutics capable of treating the rising number of multidrug resistant infections as well as disorders associated with dysregulated immune responses.