The objective of this study was to investigate the effects of thalidomide (THD) on interstitial lung fibrosis (ILF). In vitro, human fetal lung fibroblast (HFL-F) to myofibroblast (MF) trans-differentiation was induced by transforming growth factor (TGF)-beta1. The effects of THD on trans-differentiation process or differentiated MF were evaluated by measuring hydroxyproline (HYP) content by alkaline hydrolysis colorimetry, alpha-smooth muscle actin (alpha-SMA) protein by Western blot and alpha-SMA and pro-collagen III mRNA expressions by semi-quantitative reverse transcription-polymerase chain reaction; in vivo, a mouse model of ILF was generated by daily subcutaneous injection of bleomycin (BLM) in female C3H mice. Gastric perfusion of THD began 1 week prior to injection and lasted for 8 weeks. Lung specimens were harvested at different time-points (1, 4, 6 and 8 weeks) for pathology and immunohistochemistry examination. The HYP content, alpha-SMA and pro-collagen III mRNA expressions were also assessed. THD inhibited the up-regulation of HYP protein, pro-collagen III mRNA and alpha-SMA protein induced by TGF-beta1 in HFL-F cells, and additionally inhibited pro-collagen III mRNA expression on trans-differentiated MF. THD reduced HYP synthesis in the lung tissues of BLM-treated mice at week 4, and slightly reduced the numbers of alpha-SMA-positive cells. THD had an effect on ILF models both in vitro and in vivo.