Plasminogen activation to plasmin protects from lung fibrosis, but the mechanism underlying this antifibrotic effect remains unclear. We found that mice lacking plasminogen activation inhibitor-1 (PAI-1), which are protected from bleomycin-induced pulmonary fibrosis, exhibit lung overproduction of the antifibrotic lipid mediator prostaglandin E2 (PGE2). Plasminogen activation upregulated PGE2 synthesis in alveolar epithelial cells, lung fibroblasts, and lung fibrocytes from saline- and bleomycin-treated mice, as well as in normal fetal and adult primary human lung fibroblasts. This response was exaggerated in cells from Pai1-/- mice. Although enhanced PGE2 formation required the generation of plasmin, it was independent of proteinase-activated receptor 1 (PAR-1) and instead reflected proteolytic activation and release of HGF with subsequent induction of COX-2. That the HGF/COX-2/PGE2 axis mediates in vivo protection from fibrosis in Pai1-/- mice was demonstrated by experiments showing that a selective inhibitor of the HGF receptor c-Met increased lung collagen to WT levels while reducing COX-2 protein and PGE2 levels. Of clinical interest, fibroblasts from patients with idiopathic pulmonary fibrosis were found to be defective in their ability to induce COX-2 and, therefore, unable to upregulate PGE2 synthesis in response to plasmin or HGF. These studies demonstrate crosstalk between plasminogen activation and PGE2 generation in the lung and provide a mechanism for the well-known antifibrotic actions of the fibrinolytic pathway.