Proteolytic processing of procollagens is a central step during collagen fibril formation. Bone morphogenic protein 1 (BMP1) is a metalloprotease that plays an important role in the cleavage of carboxy-terminal (COOH-terminal) propeptides from procollagens. Although the removal of propeptides is required to generate mature collagen fibrils, the contribution of BMP1 to this proteolytic process and its action site remain to be fully determined. In this study, using postnatal lung fibroblasts as a model system, we showed that genetic ablation of Bmp1 in primary murine lung fibroblasts abrogated COOH-terminal cleavage from type I procollagen as measured by COOH-terminal propeptide of type I procollagen (CICP) production. We also showed that inhibition of BMP1 by siRNA-mediated knockdown or small-molecule inhibitor reduced the vast majority of CICP production and collagen deposition in primary human lung fibroblasts. Furthermore, we discovered and characterized two antibody inhibitors for BMP1. In both postnatal lung fibroblast and organoid cultures, BMP1 blockade prevented CICP production. Together, these findings reveal a nonredundant role of extracellular BMP1 to process CICP in lung fibroblasts and suggest that development of antibody inhibitors is a viable pharmacological approach to target BMP1 proteinase activity in fibrotic diseases.