Intestinal fibrosis is a serious complication of Crohn's disease (CD) that can lead to stricture formation, which requires surgery. Mechanisms underlying intestinal fibrosis remain elusive because of a lack of suitable mouse models. Herein, we describe a spontaneous mouse model of intestinal inflammation with fibrosis and the profibrotic role of arginase I. The Src homology 2 domain–containing inositol polyphosphate 5′-phosphatase–deficient (SHIP^–/–) mice developed spontaneous discontinuous intestinal inflammation restricted to the distal ileum starting at the age of 4 weeks. Mice developed several key features resembling CD, including inflammation and fibrosis. Inflammation was characterized by abundant infiltrating Gr-1–positive immune cells, granuloma-like immune cell aggregates that contained multinucleated giant cells, and a mixed type 2 and type 17 helper T-cell cytokine profile. Fibrosis was characterized by a thickened ileal muscle layer, collagen deposition, and increased fibroblasts at the sites of collagen deposition. SHIP^–/– ilea had increased arginase activity and arginase I expression that was inversely proportional to nitrotyrosine staining. SHIP^–/– mice were treated with the arginase inhibitor S-(2-boronoethyl)-l-cysteine, and changes in the disease phenotype were measured. Arginase inhibition did not affect the number of immune cell infiltrates in the SHIP^–/– mouse ilea; rather, it reduced collagen deposition and muscle hyperplasia. These findings suggest that arginase activity is a potential target to limit intestinal fibrosis in patients with CD.