Hepatic fibrosis is associated with activation of hepatic stellate cells (HSC), the major source of the extracellular matrix (ECM) proteins. The predominant ECM protein synthesized by the HSC is collagen type I. We evaluated the effect of halofuginone—an inhibitor of collagen synthesis—on thioacetamide (TAA)-induced liver fibrosis in rats. In the control rats the HSC did not express smooth muscle actin, collagen type I gene, or tissue inhibitor of metalloproteinases-2 (TIMP-2), suggesting that they were in their quiescent state. When treated with TAA, the livers displayed large fibrous septa, which were populated by smooth muscle actin-positive cells expressing high levels of the collagen α1(I) gene and containing high levels of TIMP-2, all of which are characteristic of advanced fibrosis. Halofuginone given orally before fibrosis induction prevented the activation of most of the stellate cells and the remaining cells expressed low levels of collagen α1(I) gene, resulting in low levels of collagen. The level of TIMP-2 was almost the same as in the control livers. When given to rats with established fibrosis, halofuginone caused almost complete resolution of the fibrotic condition. The levels of collagen, collagen α1(I) gene expression, TIMP-2 content, and smooth muscle actin-positive cells were as in the control rats. Halofuginone inhibited the proliferation of other cell types of the fibrotic liver in vivo and inhibited collagen production and collagen α1(I) gene expression in the SV40-immortalized rat HSC-T6 cells in vitro. These results suggest that halofuginone may become an effective and novel mode of therapy in the treatment of liver fibrosis.