Idiopathic pulmonary fibrosis is a progressive fibrotic disorder with no cure that is characterized by deterioration of lung function. Current FDA-approved drugs for IPF delay the decline in lung function, but neither reverse fibrosis nor significantly improve overall survival. SHP-1 deficiency results in hyperactive alveolar macrophages accumulating in the lung, which contribute to the induction of pulmonary fibrosis. Herein, we investigated whether employing a SHP-1 agonist ameliorates pulmonary fibrosis in a bleomycin-induced pulmonary fibrosis murine model. Histological examination and micro-computed tomography images showed that SHP-1 agonist treatment alleviates bleomycin-induced pulmonary fibrosis. Reduced alveolar hemorrhage, lung inflammation, and collagen deposition, as well as enhanced alveolar space, lung capacity, and improved overall survival were observed in mice administered the SHP-1 agonist. The percentage of macrophages collected from bronchoalveolar lavage fluid and circulating monocytes in bleomycin-instilled mice were also significantly reduced by SHP-1 agonist treatment, suggesting that the SHP-1 agonist may alleviate pulmonary fibrosis by targeting macrophages and reshaping the immunofibrotic niche. In human monocyte-derived macrophages, SHP-1 agonist treatment downregulated CSF1R expression and inactivated STAT3/NFκB signaling, culminating in inhibited macrophage survival and perturbed macrophage polarization. The expression of pro-fibrotic markers (e.g.,MRC1,CD200R1, andFN1) by IL4/IL13-induced M2 macrophages that rely on CSF1R signaling for their fate-determination was restricted by SHP-1 agonist treatment. While M2-derived medium promoted the expression of fibroblast-to-myofibroblast transition markers (e.g.,ACTA2andCOL3A1), the application of SHP-1 agonist reversed the transition in a dose-dependent manner. Our report indicates that pharmacological activation of SHP-1 ameliorates pulmonary fibrosis via suppression of CSF1R signaling in macrophages, reduction of pathogenic macrophages, and the inhibition of fibroblast-to-myofibroblast transition. Our study thus identifies SHP-1 as a druggable target for the treatment of IPF, and suggests that the SHP-1 agonist may be developed as an anti-pulmonary fibrosis medication that both suppresses inflammation and restrains fibroblast-to-myofibroblast transition.