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Inflammation initiates tendon healing and then normally resolves more or less completely. Unresolved inflammation might disturb the remodeling process. We hypothesized that suppression of inflammation during the early remodeling phase by systemic dexamethasone treatment can improve healing. 36 rats underwent Achilles tendon transection and were randomized to dexamethasone or saline on days 0-4 after surgery (early inflammatory phase), and euthanasia day 7. Another 54 rats received injections days 5-9 (early remodeling phase) and were euthanized day 12 for mechanical, histological and flow cytometric evaluation. Dexamethasone treatment days 0-4 reduced the cross-sectional area, peak force and stiffness by day 7 to less than half (p < 0.001 for all), while material properties (peak stress and elastic modulus) were not significantly affected. In contrast, dexamethasone treatment days 5-9 increased peak force by 39% (p = 0.002) and stiffness by 58% (p < 0.001). The cross-sectional area was reduced by 42% (p < 0.001). Peak stress and elastic modulus were more than doubled (p < 0.001 for both). Semi-quantitative histology at day 12 showed that late dexamethasone treatment improved collagen alignment, and flow cytometry revealed reduced numbers of CD8a + cytotoxic T cells in the tendon callus. These results suggest that downregulation of lingering inflammation during the early remodeling phase can improve healing.