Macrophage-specific expression of Arginase-1 is commonly believed to promote inflammation, fibrosis, and wound healing by enhancing L-proline, polyamine, and Th2 cytokine production. Here, however, we show that macrophage-specific Arg1 functions as an inhibitor of inflammation and fibrosis following infection with the Th2-inducing pathogen Schistosoma mansoni. Although susceptibility to infection was not affected by the conditional deletion of Arg1 in macrophages, Arg1(-/flox);LysMcre mice died at an accelerated rate. The mortality was not due to acute Th1/NOS2-mediated hepatotoxicity or endotoxemia. Instead, granulomatous inflammation, liver fibrosis, and portal hypertension increased in infected Arg1(-/flox);LysMcre mice. Similar findings were obtained with Arg1(flox/flox);Tie2cre mice, which delete Arg1 in all macrophage populations. Production of Th2 cytokines increased in the infected Arg1(-/flox);LysMcre mice, and unlike alternatively activated wild-type macrophages, Arg1(-/flox);LysMcre macrophages failed to inhibit T cell proliferation in vitro, providing an underlying mechanism for the exacerbated Th2 pathology. The suppressive activity of Arg1-expressing macrophages was independent of IL-10 and TGF-beta1. However, when exogenous L-arginine was provided, T cell proliferation was restored, suggesting that Arg1-expressing macrophages deplete arginine, which is required to sustain CD4(+) T cell responses. These data identify Arg1 as the essential suppressive mediator of alternatively activated macrophages (AAM) and demonstrate that Arg1-expressing macrophages function as suppressors rather than inducers of Th2-dependent inflammation and fibrosis.