Fibrosis is the main cause of irreversible nerve damage in leprosy. Phenotypic changes inMycobacterium leprae (ML)Yinfected Schwann cells (SCs) have been suggested to mediate this process. We found that SC line cultures stimulated with ML upregulated transforming growth factor-A1 (TGF-A1), and that TGF-A1 or ML induced increased numbers of >-smooth muscle actin (>-SMA)Ypositive cells with characteristic stress fibers. Mycobacterium leprae and TGF-A1 also induced increased type I collagen and fibronectin mRNA and secretion and augmented mRNA levels of SOX9 and ZEB1, which are involved in the epithelial-mesenchymal transition. These effects could be inhibited by the TGF-A1 type I receptor (ALK5) inhibitor, SB-431542. In nerve biopsies from leprosy-infected patients with varying grades of fibrosis (n = 11), type I and III collagen and fibronectin were found in the endoneurium and perineurium, >-SMAYpositive cells filled the fibrotic perineurium but not the endoneurium, and CD34-positive fibroblasts predominated in the endoneurium. Results of transcriptional studies of 3 leprosy nerves and 5 controls were consistent with these data, but >-SMA and other mRNA levels were not different from those in the control samples. Our findings suggest that TGF-A1 may orchestrate events, including reprogramming of the SC phenotype, leading to transdifferentiation, connective tissue cell expansion, and fibrogenesis in the evolution of leprosy nerve lesions during some evolutionary stages.