To address toxic content on social media, we introduce SMARTER, a data-efficient 2-stage framework for explainable content moderation using Large Language Models (LLMs). In Stage 1, we leverage LLMs’ own outputs to generate synthetic explanations for correct and incorrect labels, enabling preference optimization with minimal supervision. In Stage 2, we refine explanation quality through cross-model training, allowing weaker models to align with stronger ones. Experiments on 3 benchmarks (HateXplain, Latent Hate, Implicit Hate) show SMARTER achieves up to 13% macro-F1 improvement over few-shot baselines using only 6-57% of training data. Our framework offers a scalable strategy for low-data settings by harnessing LLMs’ self-improvement for explainable moderation.