Liver fibrosis is a major cause of liver failure, but treatment remains ineffective. In the present study, we investigated the mechanisms and anti-hepatofibrotic activities of asiatic acid (AA) in a rat model of liver fibrosis induced by carbon tetrachloride (CCl(4)) and in vitro in TGF-beta1-stimulated rat hepatic stellate cell line (HSC-T6). Treatment with AA significantly attenuated CCl(4)-induced liver fibrosis and functional impairment in a dosage-dependent manner, including blockade of the activation of HSC as determined by inhibiting de novo alpha smooth muscle actin (a-SMA) and collagen matrix expression, and an increase in ALT and AST (all p<0.01). The hepatoprotective effects of AA on fibrosis were associated with upregulation of hepatic Smad7, an inhibitor of TGF-beta signaling, thereby blocking upregulation of TGF-beta1 and CTGF and the activation of TGF-beta/Smad signaling. The anti-fibrosis activity and mechanisms of AA were further detected in vitro in HSC-T6. Addition of AA significantly induced Smad7 expression by HSC-T6 cells, thereby inhibiting TGF-beta1-induced Smad2/3 activation, myofibroblast transformation, and collagen matrix expression in a dosage-dependent manner. In contrast, knockdown of Smad7 in HSC-T6 cells prevented AA-induced inhibition of HSC-T6 cell activation and fibrosis in response to TGF-beta1, revealing an essential role for Smad7 in AA-induced anti-fibrotic activities during liver fibrosis in vivo and in vitro. In conclusion, AA may be a novel therapeutic agent for liver fibrosis. Induction of Smad7-dependent inhibition of TGF-beta/Smad-mediated fibrogenesis may be a central mechanism by which AA protects liver from injury.