Activated fibroblasts, or myofibroblasts, are crucial players in tissue remodeling, wound healing, and various fibrotic disorders, including interstitial lung fibrosis associated with scleroderma. Here we characterize the signaling pathways in normal lung fibroblasts exposed to thrombin as they acquire two of the main features of myofibroblasts: smooth muscle (SM) α-actin organization and collagen gel contraction. Our results show that the small G protein Rho is involved in lung myofibroblast differentiation. Thrombin induces Rho-³⁵S-labeled guanosine 5′-O-(3-thiotriphosphate) binding in a dose-dependent manner. It potently stimulates Rho activity in vivo and initiates protein kinase C (PKC)-ϵ-Rho complex formation. Toxin B, which inactivates Rho by ADP ribosylation, inhibits thrombin-induced SM α-actin organization, collagen gel contraction, and PKC-ϵ-SM α-actin and PKC-ϵ-RhoA coimmunoprecipitation. However, it has no effect on PKC-ϵ activation or translocation of PKC-ϵ to the membrane. Overexpression of constitutively active PKC-ϵ and constitutively active RhoA induces collagen gel contraction or SM α-actin organization, whereas, individually, they do not perform these functions. We therefore conclude that the contractile activity of myofibroblasts induced by thrombin is mediated via PKC-ϵ- and RhoA-dependent pathways and that activation of both of these molecules is required. We postulate that PKC-ϵ-RhoA complex formation is an early event in thrombin activation of lung fibroblasts, followed by PKC-ϵ-SM α-actin coimmunoprecipitation, which leads to the PKC-ϵ-RhoA-SM α-actin ternary complex formation.