TNF-α-converting enzyme (TACE) can cleave transmembrane proteins, such as TNF-α, TNF receptors, and epidermal growth factor receptor (EGFR) ligands, to release the extracellular domains from the cell surface. Recent studies have suggested that overexpression of TACE may be associated with the pathogenesis of inflammation and fibrosis. To determine the roles of TACE in inflammation and fibrosis, TACE transgenic (TACE-Tg) mice, which overexpressed TACE systemically, were generated. As the transgene-derived TACE was expressed as an inactive form, no spontaneous phenotype developed in TACE-Tg mice. However, the transgene-derived TACE could be converted to an active form by furin in vitro and by phorbol myristate acetate (PMA) in vivo. Subcutaneous injection of PMA into mice induced inflammatory cell infiltration 1 day later and subsequent dermal fibrosis 7 days later. Interestingly, the degree of dermal fibrosis at day 7 was significantly higher in TACE-Tg mice than in wild-type mice. Correspondingly, PMA increased the expression of type I collagen in the primary culture of dermal fibroblasts derived from TACE-Tg mice. Furthermore, phosphorylated EGFR was increased in the fibroblasts by the PMA treatment. The collective findings suggest that TACE overexpression and activation in fibroblasts could shed off putative EGFR ligands. Subsequently, the soluble EGFR ligands could bind and activate EGFR on fibroblasts, and then increase the type I collagen expression resulting in induction of dermal fibrosis. These results also suggest that TACE and EGFR on fibroblasts may be novel therapeutic targets of dermal fibrosis, which is induced after diverse inflammatory disorders of the skin.