Nicotine exposure disrupts the parathyroid hormone-related protein (PTHrP)-driven alveolar epithelial-mesenchymal paracrine-signaling pathway, resulting in the transdifferentiation of pulmonary lipofibroblasts (LIFs) to myofibroblasts (MYFs), which seems to be central to altered pulmonary development and function in infants born to mothers who smoke during pregnancy. Modulation of PTHrP-driven signaling can almost completely prevent nicotine-induced LIF-to-MYF transdifferentiation. However, once this process has occurred, whether it can be reversed is not known. Our objective was to determine if nicotine-induced LIF-to-MYF transdifferentiation could be reversed by specifically targeting the PTHrP-mediated alveolar epithelial-mesenchymal paracrine signaling. WI38 cells, a human embryonic pulmonary fibroblast cell line, were initially treated with nicotine for 7 days and LIF-to-MYF transdifferentiation was confirmed by determining the downregulation of the key lipogenic marker, peroxisome proliferator-activated receptor γ (PPARγ) and upregulation of the key myogenic marker, α-smooth muscle actin (αSMA). Because downregulation of the PPARγ signaling pathway is the key determinant of LIF-to-MYF transdifferentiation, cells were treated with three agonists of this pathway, PTHrP, dibutryl cAMP (DBcAMP), or rosiglitazone (RGZ) for 7 days, and the expression of the PTHrP receptor, PPARγ, αSMA, and calponin was determined by Western analysis and immunohistochemistry. Simultaneously, fibroblast function was characterized by measuring their capacity to take up triglycerides. Nicotine-induced LIF-to-MYF transdifferentiation was almost completely reversed by treatment with RGZ, PTHrP, or DBcAMP, as determined by protein and functional assays. Using a specific molecular approach and targeting specific molecular intermediates in the PTHrP signaling pathway, to our knowledge, this for the first time, demonstrates the reversibility of nicotine-induced LIF-to-MYF transdifferentiation, suggesting not only the possibility of prevention but also the potential for reversal of nicotine-induced lung injury.