Lipopolysaccharide (LPS)-induced proliferation of lung fibroblasts is closely correlated with loss of gene expression of thymocyte differentiation antigen-1 (Thy-1), accompanied with deacetylation of histones H3 and H4 at the Thy-1 gene promoter region; however, the mechanism remains enigmatic. We report here that LPS downregulates Thy-1 gene expression by activating histone deacetylases (HDACs) via Toll-like receptor 4 (TLR4) signaling. Treatment of primary cultured mouse lung fibroblasts with LPS resulted in significant upregulation of TLR4 and enhanced cell proliferation that was abolished by silencing TLR4 with lentivirus-delivered TLR4 shRNA. Interestingly, LPS increased the mRNA and protein levels of HDAC-4, -5, and -7, an effect that was abrogated by HDAC inhibitor trichostatin A (TSA) or TLR4-shRNA-lentivirus. Consistent with these findings, Ace-H3 and Ace-H4 were decreased by LPS that was prevented by TSA. Most importantly, chromosome immunoprecipitation (ChIP) analysis demonstrated that LPS decreased the association of Ace-H4 at the Thy-1 promoter region that was efficiently restored by pretreatment with TSA. Accordingly, LPS decreased the mRNA and protein levels of Thy-1 that was inhibited by TSA. Furthermore, silencing the Thy-1 gene by lentivirus-delivered Thy-1 shRNA could promote lung fibroblast proliferation, even in the absence of LPS. Conversely, overexpressing Thy-1 gene could inhibit lung fibroblast proliferation and reduce LPS-induced lung fibroblast proliferation. Our data suggest that LPS upregulates and activates HDACs through TLR4, resulting in deacetylation of histones H3 and H4 at the Thy-1 gene promoter that may contribute to Thy-1 gene silencing and lung fibroblast proliferation.