Acute and chronic pulmonary diseases are characterized by impaired fibrinolytic activity within the lung. To determine the role of the fibrinolytic system in regulating the pathologies associated with lung injury, we examined the effect of bleomycin, an agent that induces the development of pulmonary fibrosis, in mice deficient for plasminogen (Pg^−/−), urokinase (u-PA^−/−), urokinase receptor (u-PAR^−/−), or tissue plasminogen activator (t-PA^−/−), and in control wild-type (WT) mice. Pg^−/− and t-PA^−/− mice demonstrated an enhanced increase in lung collagen content relative to that observed in WT mice. Levels in u-PA^−/− and u-PAR^−/− mice were similar to those in WT mice. Histological analysis 14 days after lung injury confirmed enhanced interstitial fibrosis in Pg^−/−, u-PA^−/−, and t-PA^−/− mice relative to WT and u-PAR^−/− mice. Areas of pulmonary hemorrhage were observed in bleomycin-treated WT mice and not in Pg^−/−, u-PA^−/−, and u-PAR^−/− mice or saline controls. Instead, extensive areas of fibrosis were present throughout the lungs of bleomycin-treated Pg^−/− and u-PA^−/− mice. A mixed phenotype (hemorrhage and fibrosis) was observed in t-PA^−/− and Pg^+/− mice. Hemosiderin-laden macrophages were abundant in the lungs of mice exhibiting hemorrhage and these mice were prone to an early death. Enhanced macrophage levels in the lungs and activation of matrix metalloelastase (MMP-12) were found in mice with a hemorrhage phenotype. The results of these studies indicate a role for the fibrinolytic system in acute lung injury and suggests that intra-alveolar hemorrhage is the result of basement membrane degradation through cell-mediated u-PA activation of Pg with possible involvement of matrix metalloproteinases. Absence of these two components of the fibrinolytic system, either urokinase or plasminogen, results in accelerated fibrosis.