Liver disease causes significant morbidity and mortality from multilobular cirrhosis in patients with cystic fibrosis. Abnormal bile transport and biliary fibrosis implicate abnormal biliary physiology in the pathogenesis of cystic fibrosis-associated liver disease (CFLD), yet the mediators linking biliary events to fibrosis remain unknown. Activated hepatic stellate cells (HSCs) are the pre-eminent mediators of fibrosis in a range of hepatic disorders. The dominant stimulus for matrix production by HSCs is the cytokine transforming growth factor (TGF)-beta(1). In CFLD, the role of HSCs and the source of TGF-beta(1) have not been evaluated. Liver biopsy tissue obtained from 38 children with CFLD was analyzed. Activated HSCs, identified by co-localization of procollagen alpha(1)(I) mRNA and alpha-smooth muscle actin, were demonstrated as the cellular source of excess collagen production in the fibrosis surrounding the bile ducts and the advancing edge of scar tissue. TGF-beta protein and TGF-beta(1) mRNA expression were shown to be predominantly expressed by bile duct epithelial cells. TGF-beta(1) expression was significantly correlated with both hepatic fibrosis and the percentage of portal tracts showing histological abnormalities associated with CFLD. This study demonstrates a definitive role for HSCs in fibrogenesis associated with CFLD and establishes a potential mechanism for the induction of HSC collagen gene expression through the production of TGF-beta(1) by bile duct epithelial cells.