Transforming growth factor-β (TGF-β)-induced fibroblast activation is a key pathological event during tissue fibrosis. Long noncoding RNA (lncRNA) is a class of versatile gene regulators participating in various cellular and molecular processes. However, the function of lncRNA in fibroblast activation is still poorly understood. In this study, we identified growth arrest-specific transcript 5 (GAS5) as a novel regulator for TGF-β-induced fibroblast activation. GAS5 expression was downregulated in cultured fibroblasts by TGF-β and in resident fibroblasts from bleomycin-treated skin tissues. Overexpression of GAS5 suppressed TGF-β-induced fibroblast to myofibroblast differentiation. Mechanistically, GAS5 directly bound mothers against decapentaplegic homolog 3 (Smad3) and promoted Smad3 binding to Protein phosphatase 1A (PPM1A), a Smad3 dephosphatase, and thus accelerated Smad3 dephosphorylation in TGF-β-treated fibroblasts. In addition, GAS5 inhibited fibroblast proliferation. Importantly, local delivery of GAS5 via adenoviral vector suppressed bleomycin-induced skin fibrosis in mice. Collectively, our data revealed that GAS5 suppresses fibroblast activation and fibrogenesis through inhibiting TGF-β/Smad3 signaling, which provides a rationale for an lncRNA-based therapy to treat fibrotic diseases.