Pulmonary fibrosis is a common response to a variety of lung injuries, characterized by fibroblast/myofibroblast expansion and abnormal accumulation of extracellular matrix. An increased expression of matrix metalloprotease 9 (MMP9) in human and experimental lung fibrosis has been documented, but its role in the fibrotic response is unclear. We studied the effect of MMP9 overexpression in bleomycin-driven lung fibrosis using transgenic mice expressing human MMP9 in alveolar macrophages (hMMP9-TG). At 8 weeks post-bleomycin, the extent of fibrotic lesions and OH-proline content were significantly decreased in the TG mice compared to the WT mice. The decreased fibrosis in hMMP9-TG mice was preceded by a significant reduction of neutrophils and lymphocytes in bronchoalveolar lavage (BAL) at 1 and 4 weeks post-bleomycin, respectively, as well as by significantly less TIMP-1 than the WT mice. From a variety of cytokines/chemokines investigated, we found that BAL levels of insulin-like growth factor binding protein-3 (IGFBP3) as well as the immunoreactive protein in the lungs were significantly lower in hMMP9-TG mice compared with WT mice despite similar levels of gene expression. Using IGFBP-3 substrate zymography we found that BAL from TG mice at 1 week after bleomycin cleaved IGFBP-3. Further, we demonstrated that MMP9 degraded IGFBP-3 into lower molecular mass fragments. These findings suggest that increased activity of MMP9 secreted by alveolar macrophages in the lung microenvironment may have an antifibrotic effect and provide a potential mechanism involving IGFBP3 degradation.