Idiopathic pulmonary fibrosis (IPF) is a progressive lung disease with a poor prognosis and very few therapeutic options. On the molecular level, patients with IPF have increased amounts of the bone morphogenetic protein (BMP) inhibitor gremlin in their lungs, which results in decreased BMP signaling, and an increase in transforming growth factor-β signaling. Based on these findings, we hypothesized that restoration of the impaired BMP signaling would offer a novel strategy for the prevention of fibrosis progression or for the treatment of pulmonary fibrosis. We used reporter cell lines and high-throughput screening of a chemical compound library as an approach to finding molecules that increase BMP signaling in lung epithelial cells, without increasing transforming growth factor-β signaling. The most promising candidate drug was analyzed further by studying its effects on BMP target gene expression, Smad protein phosphorylation, and a mouse model of silica-induced pulmonary fibrosis. The most promising drug candidate, tilorone, induced BMP signaling in the reporter cells and increased the expression of BMP-7 and a BMP target gene, Id3, in lung epithelial A549 cells. In a mouse model of pulmonary fibrosis, tilorone decreased lung hydroxyproline content and the expression of collagen genes Col1A1 and Col3A1. Mice treated with tilorone showed markedly decreased histological changes, compared with untreated mice. These findings indicate that tilorone has biologically significant antifibrotic properties.