Bleomycin is a well known fibrogenic agent, provoking an initial adult respiratory distress syndrome–like injury with subsequent strong fibroproliferative response. Severe abnormalities of the alveolar surfactant system, which may be linked to the appearance of alveolar fibrin deposition, have been implicated in the pathogenetic sequence of events. Using a model of standardized aerosol delivery of 1.8 U bleomycin/kg body weight in rabbits, we investigated the influence of repetitive nebulization of heparin or urokinase-type plasminogen activator (u-PA) on the development of lung fibrosis. In an “early” (Days 2–12 postbleomycin) or “late” (Days 14–24 post-bleomycin) treatment protocol, approximately 3,500 U heparin or approximately 6,500 U u-PA was delivered to the bronchoalveolar space. Within four weeks, the bleomycin challenge provoked severe pulmonary fibrosis with reduction of lung compliance, marked increase in soluble collagen (bronchoalveolar lavage fluid) and hydroxyproline content (lung tissue), a typical reticular fibrosis pattern on high-resolution computed tomography, and typical histologic findings. Therapeutic intervention resulted in a far-reaching normalization of compliance, suppression of soluble collagen and hydroxyproline accumulation, and virtual abrogation of the computed tomography scan and histologic features of lung fibrosis, with most prominent effects seen in the early heparin and late u-PA administration. No bleeding complications occurred. These findings strongly support the concept that alveolar fibrin generation is an important event in the development of postbleomycin lung fibrosis. “Compartmentalized” anticoagulation and/or fibrinolysis via inhalational deposition of interventional agents in the alveolar compartment may thus offer a new therapeutic strategy for prevention of fibrosis.