Lonicera japonica (Caprifoliaceae) has been known as an anti-inflammatory herb in traditional Chinese medicine for thousands of years and is used constantly for upper respiratory tract infections. Luteolin, an active flavonoid compound isolated from Lonicera japonica, has a spectrum of biological activities, especially with antioxidative and anti-inflammatory properties. However, whether luteolin has a direct inhibitory effect on lung fibrosis has not been established. In this study, we examined the effects of luteolin on lung fibrosis both in vivo and in vitro. We found that oral administration of luteolin (10 mg/kg) efficiently suppressed the neutrophil infiltration as well as TNF-α and IL-6 elevation in the bronchoalveolar lavage fluid in bleomycin-instilled C57BL/6J mice. Luteolin also alleviated collagen deposition, TGF-β1 expression, and lung fibrosis upon bleomycin instillation. A similar tendency was observed in both early and delayed luteolin-treated groups. Next, our in vitro studies showed that luteolin inhibited TGF-β1-induced α-SMA, type I collagen, and vimentin expression in primary cultured mouse lung fibroblasts. Moreover, luteolin significantly blocked TGF-β1-mediated epithelial marker (E-cadherin) downregulation and mesenchymal cell markers (fibronectin and vimentin) upregulation, as well as retaining epithelial morphology in human alveolar epithelial-derived A549 cells. Additionally, luteolin could attenuate TGF-β1-induced Smad3 phosphorylation in both lung fibroblasts and A549 cells. These findings suggest that luteolin has a potent antifibrotic activity; this effect was mediated, at least in part, by inhibition of lung inflammation and suppression of myofibroblast differentiation as well as epithelial-to-mesenchymal transition.