AbstractHeterotopic ossification (HO) in Achilles tendon often arises due to endochondral ossification during the healing process following trauma. Retinoic acid receptor γ (RARγ) plays a critical role in this phenomenon. This study aims to elucidate the therapeutic effects of CD1530, an RARγ selective agonist, along with the contributing cells, in Achilles tendon healing, utilizing a cell lineage tracing system. Local injection of CD1530 facilitated histological tendon healing by inhibiting chondrification in a mouse Achilles rupture model. Resident Scleraxis (Scx)+ cells in Achilles tendon were not found to be actively involved in HO or tendon healing following injury. Instead, these processes were primarily driven by tendon stem/progenitor cells (TSPC)‐like cells. Furthermore, an in vitro assay revealed that CD1530 attenuated inflammation in injured Achilles tendon‐derived tendon fibroblasts (iATF) and inhibited the chondrogenesis of iATF. This dual effect suggests the potential of CD1530 in effectively modulating the healing environment during tendon healing. Together, the present study demonstrated that the local administration of CD1530 accelerated tendon healing by modulating the healing environment, including reducing chondrification via targeting TSPC‐like cells in a mouse Achilles tendon rupture model. These results suggest that CD1530 may have the potential to be a novel tendon therapy that offers benefits via the inhibition of chondrogenesis.