Adaptive cellular responses are often required during wound repair. Following disruption of the intestinal epithelium, wound‐associated epithelial (WAE) cells form the initial barrier over the wound. Our goal was to determine the critical factor that promotes WAE cell differentiation. Using an adaptation of our in vitro primary epithelial cell culture system, we found that prostaglandin E2 (PGE2) signaling through one of its receptors, Ptger4, was sufficient to drive a differentiation state morphologically and transcriptionally similar to in vivo WAE cells. WAE cell differentiation was a permanent state and dominant over enterocyte differentiation in plasticity experiments. WAE cell differentiation was triggered by nuclear β‐catenin signaling independent of canonical Wnt signaling. Creation of WAE cells via the PGE2‐Ptger4 pathway was required in vivo, as mice with loss of Ptger4 in the intestinal epithelium did not produce WAE cells and exhibited impaired wound repair. Our results demonstrate a mechanism by which WAE cells are formed by PGE2 and suggest a process of adaptive cellular reprogramming of the intestinal epithelium that occurs to ensure proper repair to injury. Synopsis Intestinal wound‐associated epithelial (WAE) cells are a transient class of repair cells critical for repair initiation. Prostaglandin PGE2 triggers WAE cell generation in response to injury, acting through its epithelial receptor EP4. The prostaglandin PGE2 stimulates wound‐associated epithelial cell formation in mouse and human cells. PGE2 acts through the receptor Ptger4 (EP4) on intestinal epithelial cells. WAE cell differentiation suppresses enterocyte differentiation of epithelial progenitors. Intestinal wound‐associated epithelial (WAE) cells are a transient class of repair cells critical for repair initiation. Prostaglandin PGE2 triggers WAE cell generation in response to injury, acting through its epithelial receptor EP4.