Hepatic stellate cells (HSCs) undergo myofibroblastic transdifferentiation (activation) to participate in liver fibrosis and identification of molecular targets for this cell fate regulation is essential for development of efficacious therapeutic modalities for the disease. Peroxisomal proliferator-activated receptor γ (PPARγ) is required for differentiation of HSCs and its epigenetic repression underlies HSC activation. The herbal prescription Yang-Gan-Wan (YGW) prevents liver fibrosis, but its active ingredients and molecular mechanisms are unknown. Here we demonstrate YGW prevents and reverses HSC activation by way of epigenetic derepression of Pparγ involving reductions in MeCP2 expression and its recruitment to Pparγ promoter, suppressed expression of PRC2 methyltransferase EZH2, and consequent reduction of H2K27di-methylation at the 3′ exon. High-performance liquid chromatography / mass spectrometry (HPLC/MS) and nuclear magnetic resonance (NMR) analyses identify polyphenolic rosmarinic acid (RA) and baicalin (BC) as active phytocompounds. RA and BC suppress the expression and signaling by canonical Wnts, which are implicated in the aforementioned Pparγ epigenetic repression. RA treatment in mice with existing cholestatic liver fibrosis inhibits HSC activation and progression of liver fibrosis. Conclusion: These results demonstrate a therapeutic potential of YGW and its active component RA and BC for liver fibrosis by way of Pparγ derepression mediated by suppression of canonical Wnt signaling in HSCs. (Hepatology 2012)