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Idiopathic pulmonary fibrosis is the most common and aggressive form of interstitial lung disease. Despite extensive research on the pathomechanisms of fibrogenesis, little is known about the mechanisms of fibrosis resolution. Here, lineage tracing of alveolar fibroblasts was carried out during fibrosis development and delayed resolution in aged mice. Histological analyses, single-cell transcriptomics, and ex vivo models including alveolar organoids and precision-cut lung slice cultures were employed. The data reveal that lipofibroblasts contribute to myofibroblast formation during fibrogenesis, with the reverse differentiation trajectory occurring during fibrosis resolution. Importantly, delayed resolution is associated with the persistence of ADAM metallopeptidase with thrombospondin type 1 motif 4-positive (ADAMTS4+) cells. Investigation of human lung transplant tissues, single-cell and spatial transcriptomic datasets, and functional ex vivo interventions reveal strong clinical relevance. Our study underscores the significance of the lipofibroblast-to-myofibroblast reversible switch in fibrosis development and resolution and identifies ADAM metallopeptidase with thrombospondin type 1 motif 4 as a potential therapeutic target in human lung fibrosis.