The presence of activated fibroblasts or myofibroblasts represents a hallmark of progressive lung fibrosis. Because the transcriptional response of fibroblasts to transforming growth factor-beta(1) (TGF-beta(1)) is a determinant of disease progression, we investigated the role of the transcriptional regulator inhibitor of differentiation-1 (Id1) in the setting of lung fibrosis. Mice lacking the gene for Id1 had increased susceptibility to bleomycin-induced lung fibrosis, and fibroblasts lacking Id1 exhibited enhanced responses to TGF-beta(1). Because the effect of Id1 on fibrosis could not be explained by known mechanisms, we performed protein interaction screening and identified a novel binding partner for Id1, known as dead ringer-like-1 (Dril1). Dril1 shares structural similarities with Id1 and was recently implicated in TGF-beta(1) signaling during embryogenesis. To date, little is known about the function of Dril1 in humans. Although it has not been previously implicated in fibrotic disease, we found that Dril1 was highly expressed in lungs from patients with idiopathic pulmonary fibrosis and was regulated by TGF-beta(1) in human fibroblasts. Dril1 enhanced activation of TGF-beta(1) target genes, whereas Id1 decreased expression of these same molecules. Id1 inhibited DNA binding by Dril1, and the two proteins co-localized in vitro and in vivo, providing a potential mechanism for suppression of fibrosis by Id1 through inhibition of the profibrotic function of Dril1.