Fibrogenesis involves a pathologic accumulation of activated fibroblasts and extensive matrix remodeling. Profibrotic cytokines, such as TGFβ, stimulate fibroblasts to overexpress fibrotic matrix proteins and induce further expression of profibrotic cytokines resulting in progressive fibrosis. Connective tissue growth factor (CTGF) is a profibrotic cytokine that is indicative of fibroblast activation. Epithelial cells are abundant in the normal lung but their contribution to fibrogenesis remains poorly defined. Profibrotic cytokines may activate epithelial cells with protein expression and functions that overlap with the functions of active fibroblasts. We found that alveolar epithelial cells undergoing TGFβ-mediated mesenchymal transition in vitro were also capable of activating lung fibroblasts through production of CTGF. Alveolar epithelial cell expression of CTGF was dramatically reduced by inhibition of Rho signaling. CTGF reporter mice demonstrated increased CTGF promoter activity by lung epithelial cells acutely after bleomycin in vivo. Furthermore, mice with lung epithelial cell-specific deletion of CTGF had an attenuated fibrotic response to bleomycin. These studies provide direct evidence that epithelial cell activation initiates a cycle of fibrogenic effector cell activation during progressive fibrosis. Therapy targeted at epithelial cell production of CTGF offers a novel pathway for abrogating this progressive cycle and limiting tissue fibrosis.