In post-haemorrhagic and other forms of communicating hydrocephalus, cerebrospinal fluid flow and drainage is obstructed by subarachnoid fibrosis in which the potent fibrogenic cytokine transforming growth factor-β has been aetiologically implicated. Here, the hypothesis that the transforming growth factor-β antagonist decorin has therapeutic potential for reducing fibrosis and ventriculomegaly was tested using a rat model of juvenile communicating hydrocephalus. Hydrocephalus was induced by a single basal cistern injection of kaolin in 3-week-old rats, immediately followed by 3 or 14 days of continuous intraventricular infusion of either human recombinant decorin or phosphate-buffered saline (vehicle). Ventricular expansion was measured by magnetic resonance imaging at Day 14. Fibrosis, transforming growth factor-β/Smad2/3 activation and hydrocephalic brain pathology were evaluated at Day 14 and the inflammatory response at Days 3 and 14 by immunohistochemistry and basic histology. Analysis of ventricular size demonstrated the development of hydrocephalus in kaolin-injected rats but also revealed that continuous decorin infusion prevented ventricular enlargement, such that ventricle size remained similar to that in intact control rats. Decorin prevented the increase in transforming growth factor-β1 and phosphorylated Smad2/3 levels throughout the ventricular system after kaolin injection and also inhibited the deposition of the extracellular matrix molecules, laminin and fibronectin in the subarachnoid space. In addition, decorin protected against hydrocephalic brain damage inferred from attenuation of glial and inflammatory reactions. Thus, we conclude that decorin prevented the development of hydrocephalus in juvenile rats by blocking transforming growth factor-β-induced subarachnoid fibrosis and protected against hydrocephalic brain damage. The results suggest that decorin is a potential clinical therapeutic for the treatment of juvenile post-haemorrhagic communicating hydrocephalus.