The molecular and cellular mechanisms that maintain proper collagen homeostasis in healthy human skin and are responsible for the dysregulated collagen synthesis in scleroderma remain primarily unknown. This study demonstrates that Fli1 is a physiological negative regulator of collagen gene expression in dermal fibroblasts in vitro and in human skin in vivo. This conclusion is supported by the analyses of mouse embryonic fibroblasts from Fli1(-/-), Fli1(+/-), and Fli1(+/+) mice. In cultured human and mouse fibroblasts Fli1 expression levels are inversely correlated with the collagen type I expression levels. These in vitro observations were validated in vivo. In healthy human skin Fli1 protein is expressed in fibroblasts and endothelial cells. Significantly, absence of Fli1 expression in individual fibroblasts correlates with elevated collagen synthesis. In contrast to healthy skin, Fli1 protein is consistently absent from fibroblasts and significantly reduced in endothelial cells in clinically involved scleroderma skin, which correlates with enhanced collagen synthesis in systemic sclerosis skin. This study supports the role of Fli1 as a suppressor of collagen transcription in human skin in vivo. Persistent down-regulation of Fli1 in scleroderma fibroblasts in vivo may directly contribute to uncontrolled matrix deposition in scleroderma skin.