Hepatic stellate cells (HSCs) are mesenchymal cells of the liver, which are normally in quiescent state and synthesize tracing amounts of extracellular matrix proteins. Upon fibrogenic stimulus, HSCs become activated and increase synthesis of type I collagen 50-100 fold. Prx1 and Prx2 are two homeobox transcription factors which are required for mesenchymal tissue formation during embryogenesis. The present study shows that Prx1 mRNA is expressed in in vivo and in vitro activated HSCs, but not in quiescent HSCs. Prx1 is also expressed in fibrotic livers, while it is undetectable in normal livers. Overexpression of Prx1a in quiescent HSCs cultured in vitro induced collagen alpha1(I) mRNA and TGFbeta3 mRNA expression. Prx1 transactivated TGFbeta3 promoter 3 fold in transient transfection experiments. In the whole liver, Prx1a induced expression of collagen alpha1(I), alpha2(I), alpha1(III) and alpha-smooth muscle mRNAs, which are the markers of activation of HSCs. Prx1 also increased expression of collagen alpha1(I) mRNA after acute liver injury. This suggests that Prx1a promotes activation of HSCs and expression of type I collagen. Several regions in the collagen alpha1(I) promoter were identified which mediate transcriptional induction by Prx1. The regions are scattered throughout the promoter and individually have modest effects; however, the cumulative effect of all sequences is >50 fold. This is the first description of the effects of Prx1 in HSCs and in the liver, and identification of the two Prx1 target genes, which play a pivotal role in development of liver fibrosis, is a novel finding for liver pathophysiology.