Mice deleted for the plasminogen activator inhibitor-1 (PAI-1) gene are relatively protected from developing pulmonary fibrosis induced by bleomycin. We hypothesized that PAI-1 deficiency reduces fibrosis by promoting plasminogen activation and accelerating the clearance of fibrin matrices that accumulate within the damaged lung. In support of this hypothesis, we found that the lungs of PAI-1–/– mice accumulated less fibrin after injury than wild-type mice, due in part to enhanced fibrinolytic activity. To further substantiate the importance of fibrin removal as the mechanism by which PAI-1 deficiency limited bleomycin-induced fibrosis, bleomycin was administered to mice deficient in the gene for the Aα-chain of fibrinogen (fib). Contrary to our expectation, fib–/– mice developed pulmonary fibrosis to a degree similar to fib+/– littermate controls, which have a plasma fibrinogen level that is 70% of that of wild-type mice. Although elimination of fibrin from the lung was not in itself protective, the beneficial effect of PAI-1 deficiency was still associated with proteolytic activity of the plasminogen activation system. In particular, inhibition of plasmin activation and/or activity by tranexamic acid reversed both the accelerated fibrin clearance and the protective effect of PAI-1 deficiency. We conclude that protection from fibrosis by PAI-1 deficiency is dependent upon increased proteolytic activity of the plasminogen activation system; however, complete removal of fibrin is not sufficient to protect the lung.