Abstract Background Patients suffering from inflammatory bowel diseases (IBDs) express increased mucosal levels of transforming growth factor (TGF)-β compared with non-IBD controls. SMAD7 negatively regulates TGF-β signaling. An earlier study aiming to target Smad7 showed a lack of clinical benefit. It remains unknown whether inhibition of SMAD7 is beneficial in specific settings of IBD. We evaluated the effect of Smad7 deficiency on inflammation, fibrogenesis, and wound healing. Methods For the initiation of fibrosis in Smad7-/- (Smad7Δex-I) CD-1 mice, the dextran sodium sulfate–induced chronic colitis model and the heterotopic transplantation model of fibrosis were used. Wound closure of fibroblasts from Smad7-/- mice was determined using culture inserts and electric cell-substrate impedance sensing in vitro. Results In dextran sodium sulfate–induced chronic colitis, Smad7 deficiency was associated with ameliorated inflammation, as evidenced by decreased clinical score, histological score, and myeloperoxidase activity. Absence of SMAD7 decreased T-cell accumulation in colonic tissue and tumor necrosis factor (TNF) mRNA expression levels. Smad7-/- mice showed a significant increase in hydroxyproline and collagen content, as well as ColIVa1 mRNA expression. Wild type mice transplanted with terminal ileum from Smad7-/- mice in the heterotopic animal model for intestinal fibrosis showed a significant increase in collagen content and protein expression of α-smooth muscle actin. Conclusions Smad7 deficiency is associated with a decrease in intestinal inflammation and an increase in fibrosis. Targeting SMAD7 constitutes a potential new treatment option for IBD; progression of disease-associated fibrosis should be considered.