Sulfur mustard gas (SM) is a vesicating and alkylating agent used as a chemical weapon in many mass-casualty incidents since World War I. Ocular injuries were reported in >90% of exposed victims. The mechanisms underlying SM-induced blindness remain elusive. This study tested the hypothesis that SM-induced corneal fibrosis occurs due to the generation of myofibroblasts from resident fibroblasts via the SMAD2/3 signaling pathway in rabbit eyes in vivo and primary human corneal fibroblasts (hCSFs) isolated from donor corneas in vitro. Fifty-four New Zealand White Rabbits were divided into three groups (Naïve, Vehicle, SM-Vapor treated). The SM-Vapor group was exposed to SM at 200 mg-min/m3 for 8 min at the MRI Global facility. Rabbit corneas were collected on day 3, day 7, and day 14 for immunohistochemistry, RNA, and protein lysates. SM caused a significant increase in SMAD2/3, pSMAD, and ɑSMA expression on day 3, day 7, and day 14 in rabbit corneas. For mechanistic studies, hCSFs were treated with nitrogen mustard (NM) or NM + SIS3 (SMAD3-specific inhibitor) and collected at 30 m, 8 h, 24 h, 48 h, and 72 h. NM significantly increased TGFβ, pSMAD3, and SMAD2/3 levels. On the contrary, inhibition of SMAD2/3 signaling by SIS3 treatment significantly reduced SMAD2/3, pSMAD3, and ɑSMA expression in hCSFs. We conclude that SMAD2/3 signaling appears to play a vital role in myofibroblast formation in the cornea following mustard gas exposure.