Fibrotic disorders of the skin share the characteristic features of increased production and deposition of extracellular matrix components by activated fibroblasts. Their clinical course ranges from benign with localized cutaneous involvement to a systemic, life-threatening disease. The molecular cause for fibroblast activation remains unknown, yet epithelial-mesenchymal interactions draw mounting attention in the research field of fibrogenesis. We examined keratinocyte growth factor (KGF), a crucial molecule in fibroblast-keratinocyte cross talk, exemplarily in keloid and scleroderma, and found its expression to be increased in disease-derived fibroblasts and tissues compared with healthy controls. This overexpression induces fibroblast activation through a double paracrine mode of action. Upon KGF stimulation, the keratinocytes produced and secreted OSM (oncostatin M). Fibroblasts were in turn activated by OSM reacting with the increased expression of collagen type I-α1, fibroblast activation protein, and enhanced migration. The observed increase in collagen expression and fibroblast migration can be traced back to OSM-regulated STAT3 phosphorylation, leading to enhanced urokinase plasminogen activator expression. Hence, we propose a causative loop in the pathogenesis of fibrosing disorders of the skin mediated by the overexpression of KGF in mesenchymal cells.