Lung fibrosis involves the overexpression of extracellular matrix (ECM) proteins, primarily collagen, by -smooth muscle actin (ASMA)-positive cells. Caveolin-1 is a master regulator of collagen expression by cultured lung fibroblasts and of lung fibrosis in vivo. A peptide equivalent to the caveolin-1 scaffolding domain (CSD peptide) inhibits collagen and tenascin-C expression by normal lung fibroblasts (NLF) and fibroblasts from the fibrotic lungs of scleroderma patients (SLF). CSD peptide inhibits ASMA expression in SLF, but not NLF. Similar inhibition of collagen, tenascin-C, and ASMA expression was also observed when caveolin-1 expression was up-regulated using adenovirus. These observations suggest that the low caveolin-1 levels in SLF cause their overexpression of collagen, tenascin-C, and ASMA. In mechanistic studies, MEK, ERK, Jun N-terminal Kinase, and Akt were hyperactivated in SLF and CSD peptide inhibited their activation and altered their subcellular localization. These studies and experiments using kinase inhibitors suggest many differences between NLF and SLF in signaling cascades. To validate these data, we determined that the alterations in signaling molecule activation observed in SLF also occur in fibrotic lung tissue from scleroderma patients and in mice with bleomycin-induced lung fibrosis. Finally, we demonstrated that systemic administration of CSD peptide to bleomycin-treated mice blocks epithelial cell apoptosis; inflammatory cell infiltration; and changes in tissue morphology; signaling molecule activation; and collagen, tenascin-C, and ASMA expression associated with lung fibrosis. CSD peptide may be a prototype for novel treatments for human lung fibrosis that act in part by inhibiting the expression of ASMA and ECM proteins.