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Pulmonary fibrosis may result from abnormal alveolar epithelial wound repair after injury. Hepatocyte growth factor modulates alveolar epithelial wound repair in the lung. Stem cells were shown to play a major role in pulmonary fibrosis. We hypothesize that stem cells express HGF in the human lung and contribute to the reduction of pulmonary fibrosis. Immunohistochemistry on primary alveolar epithelial cells obtained from lungs from patients with usual interstitial pneumonia (UIP n=7) was performed. Bone marrow derived stromal cells (BMSC) from adult male rats were transfected with HGF and instilled intratracheally into bleomycin injured rat lungs and assessed. HGF was expressed in specific cells located in fibrotic areas in UIP. Based on co staining experiments using cell specific markers HGFpositive cells showed strong co staining for the mesenchymal stromal cell markers CD44 CD29 CD105 and CD90 indicating that HGF positive cells are of stem cell origin and originate from the bone marrow (CXCR4+). These findings were confirmed on isolated cells from human firbrotic lung tissue that were positive for stem cell markers and HGF. In vivo experiments showed that HGF transfected BMSC attenuated bleomycin induced pulmonary fibrosis in the rat indicating a beneficial role of HGF expression stem cells in lung fibrosis. HGF positive stem cells originating from the bone marrow are present in human fibrotic lung tissue (UIP). HGF transfected BMSC demonstrates enhanced properties to restore pulmonary structure in bleomycin induced fibrosis in rat lungs indicating a beneficial role of HGF expressing stem cells in pulmonary fibrosis.