Hepatic stellate cell (HSC) activation on liver injury facilitates fibrosis. Hepatokines affecting HSCs are largely unknown. Here we show that hepcidin inhibits HSC activation and ameliorates liver fibrosis. We observe that hepcidin levels are inversely correlated with exacerbation of fibrosis in patients, and also confirm the relationship in animal models. Adenoviral delivery of hepcidin to mice attenuates liver fibrosis induced by CCl4 treatment or bile duct ligation. In cell-based assays, either hepcidin from hepatocytes or exogenous hepcidin suppresses HSC activation by inhibiting TGFβ1-mediated Smad3 phosphorylation via Akt. In activated HSCs, ferroportin is upregulated, which can be prevented by hepcidin treatment. Similarly, ferroportin knockdown in HSCs prohibits TGFβ1-inducible Smad3 phosphorylation and increases Akt phosphorylation, whereas ferroportin over-expression has the opposite effect. HSC-specific ferroportin deletion also ameliorates liver fibrosis. In summary, hepcidin suppresses liver fibrosis by impeding TGFβ1-induced Smad3 phosphorylation in HSCs, which depends on Akt activated by a deficiency of ferroportin.