Transplant-related lung fibrosis is characterized by excessive fibro-collagenous deposition. Induction of arginase, an enzyme that metabolizes L-arginine to urea and L-ornithine, is vital for collagen synthesis. Pirfenidone is an investigational anti-fibrotic agent shown to be effective in blocking pulmonary fibrosis. The purpose of this study was to determine if pirfenidone was protective against the development of fibro-collagenous injury in rat lung orthotopic transplants through altering L-arginine-arginase metabolic pathways. Lung transplants were performed using Lewis donors and Sprague-Dawley recipients (allografts) or the same strain (isografts). Recipients were given pirfenidone (0.5% chow) 1-21-day post-transplantation. A significantly increased peak airway pressure (PawP) with excessive collagen deposition was found in untreated lung allografts. Pirfenidone treatment decreased PawP and collagen content in lung allografts. The beneficial effects were associated with downregulation of arginase protein expression and activity. In addition, pirfenidone decreased endogenous transforming growth factor (TGF)-beta level in lung allografts, and TGF-beta stimulated arginase activity in a dose-dependent manner in both lung tissue and fibroblasts. These results suggest that pirfenidone inhibits local arginase activity possibly through suppression of endogenous TGF-beta, hence, limiting the development of fibrosis in lung allografts.