Interstitial lung disease (ILD) with pulmonary fibrosis is an important manifestation in systemic sclerosis (SSc, scleroderma) where it portends a poor prognosis. However, biomarkers that predict the development and or severity of SSc-ILD have not been validated, and the pathogenetic mechanisms that engender this pulmonary response are poorly understood. In this study, we demonstrate in two different patient cohorts that the levels of chitotriosidase (Chit1) bioactivity and protein are significantly increased in the circulation and lungs of SSc patients compared with demographically matched controls. We also demonstrate that, compared with patients without lung involvement, patients with ILD show high levels of circulating Chit1 activity that correlate with disease severity. Murine modeling shows that in comparison with wild-type mice, bleomycin-induced pulmonary fibrosis was significantly reduced in Chit1⁻/⁻ mice and significantly enhanced in lungs from Chit1 overexpressing transgenic animals. In vitro studies also demonstrated that Chit1 interacts with TGF-β1 to augment fibroblast TGF-β receptors 1 and 2 expression and TGF-β-induced Smad and MAPK/ERK activation. These studies indicate that Chit1 is potential biomarker for ILD in SSc and a therapeutic target in SSc-associated lung fibrosis and demonstrate that Chit1 augments TGF-β1 effects by increasing receptor expression and canonical and noncanonical TGF-β1 signaling.