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Recent studies showed that mesenchymal stem cell (MSC) transplantation significantly alleviated tissue fibrosis; however, little is known about the efficacy on attenuating cutaneous scar formation. In this study, we established a dermal fibrosis model induced by bleomycin and evaluated the benefit of bone marrow-derived mesenchymal stem cells (BM-MSCs) on skin fibrosis development. Tracing assay of green fluorescent protein (GFP+)BM-MSCs showed that the cells disappeared gradually within 24 hours upon administration, which hinted the action of BM-MSCs in vivo was exerted in the initial phase of repair in this model. Therefore, we repeatedly transplanted syngeneic BM-MSCs in the process of skin fibrosis formation. After 3 weeks, it was found that BM-MSC-treated lesional skin demonstrated a unanimous basket-weave organisation of collagen arrangement similar to normal skin, with few inflammatory cells. In addition, lesional skin with BM-MSC treatment exhibited a significant down-regulation of transforming growth factor-β1 (TGF-β1), type I collagen and heat-shock protein 47 (HSP47), with higher expression of matrix metalloproteinases (MMPs)-2, -9 and -13. Further experiments showed that α-smooth muscle actin (α-SMA) positive cells, the most reliable marker of myofibroblasts, apparently decreased after BM-MSC transplantation, which revealed that BM-MSCs could attenuate myofibroblast proliferation and differentiation as well as matrix production. Taken together, these findings suggested that BM-MSCs can inhibit the formation process of bleomycin-induced skin fibrosis, alleviate inflammation and favour the remodelling of extracellular matrix.