Fibrosis is a chronic disease characterized by an excessive deposition of scar tissue in the affected organs. A central mediator of this process is transforming growth factor-β (TGF-β), which stimulates the production of extracellular matrix proteins such as collagens. MicroRNAs (miRNAs) have been implicated in both fibrosis as well as in TGF-β signaling, but the extent of their regulation has not been fully defined. A functional screen was conducted using a library of miRNA inhibitors to identify miRNAs that affect TGF-β-induced type I collagen expression, a key event in the development of fibrosis. The inhibition of one miRNA in particular, miR-27b, caused a significant increase in type I collagen expression. We found that miR-27b directly targets Gremlin 1 by binding to its 3′-UTR, reducing its mRNA levels. TGF-β signaling decreased miR-27b expression and caused a corresponding increase in Gremlin 1 levels, suggesting that TGF-β regulates Gremlin 1 expression in part by modulating miR-27b expression. Reducing Gremlin 1 levels by either siRNA-mediated gene silencing or by using the miR-27b mimic inhibited the expression of several genes known to be involved in fibrosis, while increasing Gremlin 1 levels by the addition of either recombinant protein or the miR-27b inhibitor enhanced the expression of these genes. In summary, we have demonstrated that miR-27b targets Gremlin 1, and that this regulation likely represents an important control point in fibrotic pathways. J. Cell. Biochem. 115: 1539–1548, 2014. © 2014 Wiley Periodicals, Inc.