Abstract The role of IL-1β in inflammation is amply documented, but its ability to inhibit myofibroblast differentiation and, in particular, the suppression of α-smooth muscle actin (α-SMA) gene expression is less well understood. Because IL-1β can induce C/EBPβ expression, the role of C/EBPβ isoforms in IL-1β regulation of α-SMA gene expression was investigated in rat lung myofibroblasts. The results showed that IL-1β inhibited α-SMA expression in a dose-dependent manner, which was associated with stimulation of the expression of both C/EBPβ isoforms, liver-enriched activating protein (LAP) and liver-enriched inhibitory protein (LIP). However, a greater increase in LIP relative to LAP expression resulted in a reduced LAP/LIP ratio after IL-1β treatment. Transfection with an LAP-expressing plasmid stimulated, whereas an LIP-expressing plasmid inhibited, α-SMA expression. Cells from C/EBPβ-deficient mice had reduced levels of α-SMA expression and promoter activity, which failed to respond to IL-1β treatment. Sequence analysis identified the presence of a C/EBPβ consensus binding sequence in the α-SMA promoter, which, when mutated, resulted in diminished promoter activity and abolished its responsiveness to IL-1β treatment. EMSA revealed binding of C/EBPβ to this C/EBPβ consensus binding sequence from the α-SMA promoter. Finally, IL-1β enhanced the expression of eukaryotic initiation factor 4E, a stimulator of LIP expression, which may account for a mechanism by which IL-1β could alter the LAP/LIP ratio. These data taken together suggest that C/EBPβ isoforms regulate α-SMA gene expression, and that its inhibition by IL-1β was due to preferential stimulation of LIP expression.