Tissue recovery after injury requires coordinated regulation of cell repair and apoptosis, removal of dead cells, and regeneration. A critical step in this process is the recruitment of blood cells that mediate local inflammatory and immune responses, promoting tissue recovery. Here we identify a new role for the transcriptional regulator Schnurri (Shn) in the recovery of UV-damaged Drosophila retina. Using an experimental paradigm that allows precise quantification of tissue recovery after a defined dose of UV, we find that Shn activity in the retina is required to limit tissue damage. This function of Shn relies on its transcriptional induction of the PDGF-like growth factor pvf-1, which signals to tissue-associated hemocytes. We show the pvf-1 receptor, PVR, acts in hemocytes to induce a macrophage-like morphology, and that this is required to limit tissue loss after irradiation. Our results identify a new Shn-regulated paracrine signaling interaction between damaged retinal cells and hemocytes ensures recovery and homeostasis of the challenged tissue.