Overexpression of wound healing-promoting factors such as transforming growth factor-1 (TGF-β1) and insulin-like growth factor-1 (IGF-1) during the healing process has been implicated in the development of dermal fibrosis in patients following thermal injury, surgical incision, and deep trauma. However, the mechanism through which the expression of these two fibrogenic factors is slowed down and/or abrogated in the late stages of the healing process is not known. Here, we hypothesize that keratinocyte-releasable factors counteract the fibrogenic role of both IGF-1 and TGF-β1 in fibroblasts. To test this hypothesis, the levels of collagenase (MMP-1), as an index for extracellular matrix degradation, in dermal fibroblasts in response to either keratinocyte-conditioned medium (KCM) or our recently identified keratinocyte-releasable stratifin in the presence and absence of either IGF-1, TGF-β1, or both were evaluated. The results of Northern analysis showed a significant increase in collagenase mRNA expression in cells treated with KCM in the presence of both IGF-1 and TGF-β1. The effect was, at least in part, due to keratinocyte-derived stratifin that was present in KCM. This was ascertained as the levels of MMP-1 mRNA were markedly reduced when cells were treated with stratifin-immuno-depleted KCM. The results of Western blot analysis showed an increase in the level of MMP-1 protein in stratifin-treated fibroblasts and this was consistent with the level of MMP-1 mRNA expression detected by Northern analysis. However, in contrast to KCM, whose efficacy on MMP-1 expression was modestly reduced by either IGF-1 and TGF-β1, or a combination of both, these factors abrogated the MMP-1 stimulatory effect of stratifin in fibroblasts. In summary, the results of this study revealed that both stratifin and KCM stimulate the expression of MMP-1-in fibroblasts and this effect can be abrogated by either IGF-1, TGF-β1, or a combination of both.