Recruited blood monocytes contribute to the establishment, perpetuation, and resolution of tissue inflammation. Specifically, in the inflamed intestine, monocyte ablation was shown to ameliorate colitis scores in preclinical animal models. However, the majority of intestinal macrophages that seed the healthy gut are also monocyte derived. Monocyte ablation aimed to curb inflammation would therefore likely interfere with intestinal homeostasis. In this study, we used a TLR2 trans-membrane peptide that blocks TLR2 dimerization that is critical for TLR2/1 and TLR2/6 heterodimer signaling to blunt inflammation in a murine colitis model. We show that although the TLR2 peptide treatment ameliorated colitis, it allowed recruited monocytes to give rise to macrophages that lack the detrimental proinflammatory gene signature and reduced potentially damaging neutrophil infiltrates. Finally, we demonstrate TLR blocking activity of the peptide on in vitro cultured human monocyte-derived macrophages. Collectively, we provide a significantly improved anti-inflammatory TLR2 peptide and critical insights in its mechanism of action toward future potential use in the clinic.