Recent evidence highlights the importance of mitochondrial bioenergetics and dynamics in regulating macrophage polarisation. We demonstrate that Arginase-2 (Arg2), one of two arginase isoforms, is a miR-155 and interleukin-10 (IL-10) regulated gene localized at mitochondria in inflammatory macrophages, and is critical for IL-10 induced restoration of oxidative respiration. We show that IL-10 radically affects mitochondrial dynamics by promoting a state of enhanced ‘fusion’, which likely facilitates the higher oxidative bioenergetics we observe. Mechanistically, we show that both the catalytic activity and presence of Arg2 at the mitochondria is crucial for boosting oxidative phosphorylation (OxPhos). We further show Arg2 mediates this process by influencing activity of complex II (also known as succinate dehydrogenase (SDH)), a bi-functional enzyme that links the mitochondrial electron transport chain (ETC) and the TCA cycle. We subsequently show Arg2 is crucial for IL-10 mediated downregulation of inflammatory mediators including succinate, hypoxia inducible factor 1α (HIF-1α) and interleukin 1β (IL-1β) in vitro. Additionally, we show Arg2 expression was significantly downregulated in IL-10 deficient mice in an LPS-induced acute model of inflammation. Furthermore, we observed elevated levels of HIF-1α and IL-1β in this model using Arg2 deficient mice. These findings shed light on a new arm of IL-10 mediated metabolic regulation via Arg2, where it works to resolve the inflammatory status of the cell.