TGF- plays a central role in lung fibrosis, stimulating extracellular matrix deposition. Intracellular signaling of TGF- is mediated by Smad proteins. We questioned whether the expression and activation of Smads would be altered in lung fibroblasts from rats exposed to bleomycin, an agent used to provoke an experimental model of lung fibrosis. Fibroblasts were isolated from rat lungs 14 days after intra-tracheal instillation of bleomycin (BLF) or saline (NLF), and cell cultures established. Whole cell lysates were obtained at baseline, and after stimulation with TGF-1 (10 ng/ml). Western blot analysis was performed to measure levels of phosphorylated Smad3 (p-Smad3) and Smad7. Real-time PCR was used to determine changes in Smad7 mRNA after TGF- stimulation. We found increased baseline levels of p-Smad3 in BLF versus NLF (p < 0.05). In contrast, baseline levels of Smad7 were comparable. The ratio of stimulatory to inhibitory Smads was increased in BLF compared to NLF (p < 0.05). After stimulation with TGF-, levels of p-Smad3 were increased in both groups, with maximal responses at 30 min (p<0.01). While Smad7 mRNA levels were significantly upregulated (at 1 h) after TGF- in both groups, the increase in Smad7 protein was significant in NLF only. We conclude there is sustained activation of Smad signaling in lung fibroblasts isolated from bleomycin-exposed rats, with an imbalance between the levels of p-Smad3 and Smad7. Insufficient levels of the inhibitory Smad7 at baseline, and inadequate response to TGF-, may contribute to the fibrotic phenotype characteristic of BLF.