Heterogeneous surface expression of Thy-1 in fibroblasts modulates inflammation and may thereby modulate injury and repair. As a paradigm, patients with idiopathic pulmonary fibrosis, a disease with pathologic features of chronic inflammation, demonstrate an absence of Thy-1 immunoreactivity within areas of fibrotic activity (fibroblast foci) in contrast to the predominant Thy-1 expressing fibroblasts in the normal lung. Likewise, Thy-1 deficient mice display more severe lung fibrosis in response to an inflammatory injury than wildtype littermates. We investigated the role of Thy-1 in the response of fibroblasts to the pro-inflammatory cytokine TNF-alpha. Our study demonstrates distinct profiles of TNF-alpha-activated gene expression in Thy-1 positive (Thy-1+) and negative (Thy-1-) subsets of mouse embryonic fibroblasts (MEF). TNF-alpha induced a robust activation of MMP-9, ICAM-1, and the IL-8 promoter driven reporter in Thy-1- MEFs, in contrast to only a modest increase in Thy-1+ counterparts. Consistently, ectopic expression of Thy-1 in Thy-1- MEFs significantly attenuated TNF-alpha-activated gene expression. Mechanistically, TNF-alpha activated Src family kinase (SFK) only in Thy-1- MEFs. Blockade of SFK activation abrogated TNF-alpha-activated gene expression in Thy-1- MEFs, whereas restoration of SFK activation rescued the TNF-alpha response in Thy-1+ MEFs. Our findings suggest that Thy-1 down-regulates TNF-alpha-activated gene expression via interfering with SFK- and NF-kappaB-mediated transactivation. The current study provides a novel mechanistic insight to the distinct roles of fibroblast Thy-1 subsets in inflammation.