The mechanisms linking hepatocellular death, hepatic stellate cell (HSC) activation, and liver fibrosis are largely unknown. Here, we investigate whether acidic sphingomyelinase (ASMase), a known regulator of death receptor and stress-induced hepatocyte apoptosis, plays a role in liver fibrogenesis. We show that selective stimulation of ASMase (up to sixfold), but not neutral sphingomyelinase, occurs during the transdifferentiation/activation of primary mouse HSCs into myofibroblast-like cells, coinciding with cathepsin B (CtsB) and D (CtsD) processing. ASMase inhibition or genetic down-regulation by small interfering RNA blunted CtsB/D processing, preventing the activation and proliferation of mouse and human HSCs (LX2 cells). In accordance, HSCs from heterozygous ASMase mice exhibited decreased CtsB/D processing, as well as lower levels of alpha-smooth muscle actin expression and proliferation. Moreover, pharmacological CtsB inhibition reproduced the antagonism of ASMase in preventing the fibrogenic properties of HSCs, without affecting ASMase activity. Interestingly, liver fibrosis induced by bile duct ligation or carbon tetrachloride administration was reduced in heterozygous ASMase mice compared with that in wild-type animals, regardless of their sensitivity to liver injury in either model. To provide further evidence for the ASMase-CtsB pathway in hepatic fibrosis, liver samples from patients with nonalcoholic steatohepatitis were studied. CtsB and ASMase mRNA levels increased eight- and threefold, respectively, in patients compared with healthy controls. These findings illustrate a novel role of ASMase in HSC biology and liver fibrogenesis by regulating its downstream effectors CtsB/D.