P311, also called PTZ17, was identified by suppressive subtraction hybridization as potentially involved in smooth muscle (SM) myogenesis. P311 is an 8-kDa protein with several PEST-like motifs found in neurons and muscle. P311 transfection into two fibroblast cell lines, NIH 3T3 and C3H10 T1/2, induced phenotypic changes consistent with myofibroblast transformation, including upregulation of SM α−actin and SM22, induction of FGF-2, VEGF, PDGF, and PDGF receptors, upregulation of integrins α3 and α5, and increased proliferation rate. The P311-mediated changes differed, however, from the well-characterized myofibroblast in that P311 inhibited TGF-β1, TGF-β receptor 2, and TGF-β1–activating MMP-2 and MMP-9, with the resultant decrease in collagen 1 and 3 expression. The effect of P311 on collagen was overcome by exogenous TGF-β1, indicating that the cells were responsive to TGF-β1 paracrine stimulus. In support of a role for P311 in vivo, immunohistochemical examination of human wounds showed P311 only in myofibroblasts and their activated precursors. To our knowledge, these studies are the first to implicate P311 in myofibroblast transformation, to demonstrate that transformation may occur independently of TGF-β1, and to suggest that P311 may prevent fibrosis.