The etiology of idiopathic pulmonary fibrosis (IPF) is unknown. Because viral pathogenesis of IPF has been suggested, we have established a murine model of progressive pulmonary fibrosis by infecting IFN-gammaR-deficient mice (IFN-gammaR(-/-)) with the murine gamma-herpesvirus 68. Because alveolar macrophages in humans with IPF have been implicated in driving the profibrotic response, we studied their role in our model. Chronic herpesvirus infection of the lung was associated with recruitment of alveolar macrophages to areas with epithelial hyperplasia and fibrosis in infected lungs. Using immunohistochemistry, Western blot, and RT-PCR techniques, we demonstrated that recruited alveolar macrophages showed high levels of expression of the proteins Ym1/2, FIZZ1 (found in inflammatory zone 1), insulin-like growth factor-1, and arginase I, and also active transcription of fibronectin, indicative of activation of macrophages by an alternative pathway. Arginase I expression was also evident in interstitial fibroblasts, and increased arginase activity was found in lungs of infected animals. Lung tissue from patients with IPF showed increased expression of arginase I in epithelial cells, fibroblast foci, and alveolar macrophages compared with normal lung. These results suggest that virus-induced upregulation of arginase I could be a mechanism driving lung fibrogenesis.