While recent studies showed that macrophages are critical for bone fracture healing, and lack of M2 macrophages have been implicated in models of delayed union, functional roles for specific M2 receptors have yet to be defined. Moreover, the M2 scavenger receptor CD163 has been identified as a target to inhibit sepsis following implant-associated osteomyelitis, but potential adverse effects on bone healing during blockage therapy have yet to be explored. Thus, we investigated fracture healing in C57BL/6 versus CD163^−/− mice using a well-established closed, stabilized, mid-diaphyseal femur fracture model. While gross fracture healing in CD163^−/− mice was similar to that of C57BL/6, plain radiographs revealed persistent fracture gaps in the mutant mice on Day 14, which resolved by Day 21. Consistently, 3D vascular micro-CT demonstrated delayed union on Day 21, with reduced bone volume (74%, 61%, and 49%) and vasculature (40%, 40%, and 18%) compared to C57BL/6 on Days 10, 14, and 21 postfracture, respectively (p < 0.01). Histology confirmed large amounts of persistent cartilage in CD163^−/− versus C57BL/6 fracture callus on Days 7 and 10 that resolves over time, and immunohistochemistry demonstrated deficiencies in CD206⁺ M2 macrophages. Torsion testing of the fractures confirmed the delayed early union in CD163^−/− femurs, which display decreased yield torque on Day 21, and a decreased rigidity with a commensurate increase in rotation at yield on Day 28 (p < 0.01). Collectively, these results demonstrate that CD163 is required for normal angiogenesis, callus formation, and bone remodeling during fracture healing, and raise potential concerns about CD163 blockade therapy.