Myocardial infarction initiates cardiac remodeling and is central to heart failure pathogenesis. Following myocardial ischemia-reperfusion injury, monocytes enter the heart and differentiate into diverse subpopulations of macrophages. Here we show that deletion of Hif1α, a hypoxia response transcription factor, in resident cardiac macrophages led to increased remodeling and overrepresentation of macrophages expressing arginase 1 (Arg1). Arg1+ macrophages displayed an inflammatory gene signature and may represent an intermediate state of monocyte differentiation. Lineage tracing of Arg1+ macrophages revealed a monocyte differentiation trajectory consisting of multiple transcriptionally distinct states. We further showed that deletion of Hif1α in resident cardiac macrophages resulted in arrested progression through this trajectory and accumulation of an inflammatory intermediate state marked by persistent Arg1 expression. Depletion of the Arg1+ trajectory accelerated cardiac remodeling following ischemic injury. Our findings unveil distinct trajectories of monocyte differentiation and identify hypoxia sensing as an important determinant of monocyte differentiation following myocardial infarction.