Lung-resident mesenchymal stem cells (LR-MSCs) are important regulators of lung repair and regeneration, and evidence suggests that this cell population also plays a vital role in fibrosis. Crosstalk between sonic hedgehog (Shh) signaling and wingless/integrated (Wnt) has been demonstrated in idiopathic pulmonary fibrosis (IPF). However, the underlying correlation between LR-MSCs and the Shh-Wnt signaling cascade remains poorly understood. Here, we identified Wnt10a as a key factor in pulmonary fibrosis. Using a bleomycin mouse model, we found that highly expressed Wnt10a was secreted by LR-MSCs undergoing myofibroblastic differentiation. LR-MSCs with myofibroblast characteristics isolated from fibrotic lungs exhibited increased Shh pathway activity, suggesting their role as Shh targets. In vitro, LR-MSCs responded to stimulation by recombinant Shh, acquiring a myofibroblast phenotype. We further demonstrated that the Shh/glioblastoma (Gli) system machinery regulated LR-MSC-to-myofibroblast transition and pulmonary fibrosis via manipulation of Wnt/β-catenin signaling. Accordingly, inhibition of the Shh-Wnt signaling cascade prevented LR-MSC transformation into myofibroblasts and ameliorated pulmonary fibrotic lesions. Moreover, induction of Wnt10a expression and activation of Shh/Gli signaling were confirmed in human pulmonary fibrosis. In summary, this study linking the Shh-Wnt signaling cascade with LR-MSC fibrogenic activity furthered the current understanding of pulmonary fibrosis pathogenesis and might provide a new perspective in the development of treatment strategies for IPF.