Formation of a specialized wound epidermis is required to initiate salamander limb regeneration. Yet little is known about the roles of the early wound epidermis during the initiation of regeneration and the mechanisms governing its development into the apical epithelial cap (AEC), a signaling structure necessary for outgrowth and patterning of the regenerate. Here, we elucidate the functions of the early wound epidermis, and further reveal midkine (mk) as a dual regulator of both AEC development and inflammation during the initiation of axolotl limb regeneration. Through loss- and gain-of-function experiments, we demonstrate that mk acts as both a critical survival signal to control the expansion and function of the early wound epidermis and an anti-inflammatory cytokine to resolve early injury-induced inflammation. Altogether, these findings unveil one of the first identified regulators of AEC development and provide fundamental insights into early wound epidermis function, development, and the initiation of limb regeneration.