Myofibroblasts (myoFb) are cells responsible for fibrous tissue formation in injured systemic organs such as the heart. Cultured myoFb, obtained from rat cardiac scar tissue, express genes that encode components requisite for angiotensin (Ang) II generation, which in turn regulates myoFb collagen turnover in an autocrine/paracrine manner. In this study, we tested the hypothesis that these wound-healing fibroblast-like cells and locally generated Ang II are involved in other repairing tissue. To test this hypothesis, we used a granuloma pouch model, where a subcutaneous air sac is created followed by injection of croton oil. Pouch tissue was collected at days 4, 7, 14 and 21. The presence of myoFb was determined by immunohistochemical alpha-smooth muscle actin (alpha-SMA) labeling and collagen accumulation by picrosirius red staining. Angiotensin converting enzyme (ACE) and Ang II receptor binding were detected by in vitro quantitative autoradiography using 125I-351A and 125I[Sar1, Ile8]Ang II, respectively, while Ang II receptor subtype was defined by displacement studies using either an AT1 (losartan) or AT2 (PD123177) receptor antagonist. Cells expressing ACE were determined by immunohistochemistry. Ang II content in pouch tissue was measured by radioimmunoassay following HPLC separation while its capacity to generate Ang II was assessed in tissue bath, with and without exogenous Ang I or lisinopril, an ACE inhibitor. Collagen accumulation in pouch tissue was examined by determining hydroxyproline content in response to lisinopril, AT1 or AT2 receptor antagonists (losartan or PD123177). In pouch tissue, we found: (1) myoFb at day 4 which became more extensive at days 7, 14 and 21; (2) morphologic evidence of collagen deposition evident at day 4, which gradually became more extensive thereafter; (3) ACE and Ang II receptor binding was evident at day 4 and remained invariant on days 7, 14 and 21; (4) the predominant Ang II receptor subtype expressed was AT1; (5) myoFb express ACE and AT1 receptors; (6) picogram quantities of Ang II (per g tissue) was evident on days 7, 14 and 21; and (7) Ang II was generated from Ang I substrate. Lisinopril and losartan, but not PD123177, significantly attenuated pouch weight and accumulation of collagen. Thus, in this model of cutaneous repair, the appearance of myoFb is associated with Ang II generation that regulates fibrogenesis by AT1 receptor binding. Signals involved in the appearance of myoFb remain uncertain. Further studies are required to address the regulation of Ang II generation in pouch tissue of the rat.