A retractable tow strap apparatus includes a housing containing a spool operably connected to a crank on the exterior of the housing. A tow strap is wound around the spool, the ends of the strap extending through a pair of apertures on opposite sides of the housing. Unwinding the strap from the spool through the apertures rotates the spool in a first direction. The strap is retrieved onto the spool by rotating the spool in a second direction using the crank. Springs within the housing apply a braking force on the portion of the strap that is on the spool, whereby slack in the strap and resultant tangling may be minimized as the strap is wound and unwound from the spool. The strap is formed of a unitary webbing element that extends through the spool, thereby minimizing the application of tension forces directly to the spool during a towing operation.