Tissue macrophages self-renew during homeostasis and produce inflammatory mediators upon microbial infection. We examined the relationship between proliferative and inflammatory properties of tissue macrophages by defining the impact of the Wnt/β-catenin pathway, a central regulator of self-renewal, in alveolar macrophages (AMs). Activation of β-catenin by Wnt ligand inhibited AM proliferation and stemness, but promoted inflammatory activity. In a murine influenza viral pneumonia model, β-catenin-mediated AM inflammatory activity promoted acute host morbidity; in contrast, AM proliferation enabled repopulation of reparative AMs and tissue recovery following viral clearance. Mechanistically, Wnt treatment promoted β-catenin-HIF-1α interaction and glycolysis-dependent inflammation while suppressing mitochondrial metabolism and thereby, AM proliferation. Differential HIF-1α activities distinguished proliferative and inflammatory AMs in vivo. This β-catenin-HIF-1α axis was conserved in human AMs and enhanced HIF-1α expression associated with macrophage inflammation in COVID-19 patients. Thus, inflammatory and reparative activities of lung macrophages are regulated by β-catenin-HIF-1α signaling, with implications for the treatment of severe respiratory diseases.