Skeletal muscle fibrosis is a major pathological hallmark of chronic myopathies in which myofibers are replaced by progressive deposition of collagen and other extracellular matrix proteins produced by muscle fibroblasts. Recent studies have shown that in the absence of the endogenous muscle growth regulator myostatin, regeneration of muscle is enhanced, and muscle fibrosis is correspondingly reduced. We now demonstrate that myostatin not only regulates the growth of myocytes but also directly regulates muscle fibroblasts. Our results show that myostatin stimulates the proliferation of muscle fibroblasts and the production of extracellular matrix proteins both in vitro and in vivo. Further, muscle fibroblasts express myostatin and its putative receptor activin receptor IIB. Proliferation of muscle fibroblasts, induced by myostatin, involves the activation of Smad, p38 MAPK and Akt pathways. These results expand our understanding of the function of myostatin in muscle tissue and provide a potential target for anti-fibrotic therapies.