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Burn injuries affect millions of people every year, and dermal fibrosis is a common complication for the victims. This disfigurement has functional and cosmetic consequences and many research groups have made it the focus of their work to understand the mechanisms that underlie its development. Although significant progress has been made in wound-healing processes, the complexity of events involved makes it very difficult to come up with a single strategy to prevent this devastating fibrotic condition. Inflammation is considered one predisposing factor, although this phase is a necessary aspect of the wound-healing process. Inflammation, driven by infiltrated immune cells, begins minutes after the burn injury and is the prevalent phase of wound healing in the early stages. Accompanying the inflammatory infiltrate, there is evidence that subpopulations of bone marrow–derived cells are also present. These populations include fibrocytes and keratinocyte-like cells, derivatives of CD14+ monocytes, a component of the peripheral blood mononuclear cell infiltrate. There is evidence that these cells contribute to regeneration and repair of the wound site, but it is interesting to note that there are also reports that these cells can have adverse effects and may contribute to the development of dermal fibrosis. In this article, the authors present a review of the origin and transdifferentiation of these cells from bone marrow stem cells, the environments that direct this transdifferentiation, and evidence to support their role in fibrosis, as well as potential avenues for therapeutics to control their fibrotic effects.