Transforming growth factor (TGF)-beta plays an important role in tissue fibrogenesis. We previously demonstrated that reduced glutathione (GSH) supplementation blocked collagen accumulation induced by TGF-beta in NIH-3T3 cells. In the present study, we show that supplementation of GSH restores the collagen degradation rate in TGF-beta-treated NIH-3T3 cells. Restoration of collagen degradation by GSH is associated with a reduction of type I plasminogen activator inhibitor (PAI)-1 expression/activity as well as recovery of the activities of cell/extracellular matrix-associated tissue-type plasminogen activator and plasmin. Furthermore, we find that NIH-3T3 cells constitutively express plasminogen mRNA and possess plasmin activity. Blockade of cell surface binding of plasminogen/plasminogen activation with tranexamic acid (TXA) or inhibition of plasmin activity with aprotinin significantly reduces the basal level of collagen degradation both in the presence or absence of exogenous plasminogen. Most importantly, addition of TXA or active PAI-1 almost completely eliminates the restorative effects of GSH on collagen degradation in TGF-beta treated cells. Together, our results suggest that the major mechanism by which GSH restores collagen degradation in TGF-beta-treated cells is through blocking PAI-1 expression, leading to increased PA/plasmin activity and consequent proteolytic degradation of collagens. This study provides mechanistic evidence for GSH's putative therapeutic effect in the treatment of fibrotic disorders.