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Heterotopic ossification (HO) develops in the extremities of wounded service members and is common in the setting of high-energy penetrating injuries and blast-related amputations. No safe and effective prophylaxis modality has been identified for this patient population. Palovarotene has been shown to reduce bone formation in traumatic and genetic models of HO. The purpose of this study was to determine the effects of Palovarotene on inflammation, progenitor cell proliferation, and gene expression following a blast-related amputation in a rodent model (n = 72 animals), as well as the ability of Raman spectroscopy to detect early HO before radiographic changes are present. Treatment with Palovarotene was found to dampen the systemic inflammatory response including the cytokines IL-6 (p = 0.01), TNF-α (p = 0.001), and IFN-γ (p = 0.03) as well as the local inflammatory response via a 76% reduction in the cellular infiltration at post-operative day (POD)-7 (p = 0.03). Palovarotene decreased osteogenic connective tissue progenitor (CTP-O) colonies by as much as 98% both in vitro (p = 0.04) and in vivo (p = 0.01). Palovarotene treated animals exhibited significantly decreased expression of osteo- and chondrogenic genes by POD-7, including BMP4 (p = 0.02). Finally, Raman spectroscopy was able to detect differences between the two groups by POD-1 (p < 0.001). These results indicate that Palovarotene inhibits traumatic HO formation through multiple inter-related mechanisms including anti-inflammatory, anti-proliferative, and gene expression modulation. Further, that Raman spectroscopy is able to detect markers of early HO formation before it becomes radiographically evident, which could facilitate earlier diagnosis and treatment. © 2017 Orthopaedic Research Society. Published by Wiley Periodicals, Inc. J Orthop Res 36:1135-1144, 2018., (© 2017 Orthopaedic Research Society. Published by Wiley Periodicals, Inc.)