Recent evidence suggests that subsets of lung fibroblasts differentially contribute to fibrogenic progression. We have previously shown that a subset of rat lung fibroblasts with fibrogenic characteristics [Thy-1 (−) fibroblasts] responds to stimuli (bleomycin, interleukin-4, etc) with increased latent transforming growth factor (TGF)-β activation, whereas non-fibrogenic Thy-1-expressing [Thy-1 (+)] fibroblasts do not. Activation of latent TGF-β1 by interstitial lung fibroblasts is critical for fibrogenic responses. To better understand the susceptibility of fibrogenic fibroblasts to the stimulation of TGF-β activation, we examined the role of latent TGF-β-binding proteins (LTBPs), key regulators of TGF-β bioavailability and activation, in TGF-β1 activation by these fibroblasts. Treatment of fibroblasts with bleomycin up-regulated LTBP-4 mRNA, protein, and soluble LTBP-4-bound large latent TGF-β1 complexes in Thy-1 (−) fibroblasts to significantly higher levels than in Thy-1 (+) fibroblasts. Bleomycin-induced TGF-β1 activation required LTBP-4, since lung fibroblasts deficient in LTBP-4 did not activate TGF-β1. Expression of LTBP-4 restored TGF-β1 activation in response to bleomycin, but expression either of LTBP-4 lacking the TGF-β-binding site or only the TGF-β-binding domain did not. Bleomycin treatment of mice increased LTBP-4 expression in the lung. Thy-1 knockout mice had increased levels of both LTBP-4 expression and TGF-β activation, as well as enhanced Smad3 phosphorylation compared with wild-type mice. Together, these data identify a critical role for LTBP-4 in the regulation of latent TGF-β1 activation in bleomycin-induced lung fibrosis.