Recent studies have presented compelling evidence that it is not tissue-resident, but rather monocyte-derived alveolar macrophages (TR-AMs and Mo-AMs, respectively) that are essential to development of experimental lung fibrosis. However, whether apolipoprotein E (ApoE), which is produced abundantly by Mo-AMs in the lung, plays a role in the pathogenesis is unclear. In this study, we found that pulmonary ApoE was almost exclusively produced by Mo-AMs in mice with bleomycin-induced lung fibrosis. We showed that, although ApoE was not necessary for developing maximal fibrosis in bleomycin-injured lung, it was required for the resolution of this pathology. We found that ApoE directly bound to Collagen I and mediated Collagen I phagocytosis in vitro and in vivo, and this process was dependent on low-density lipoprotein receptor-related protein 1 (LPR1). Furthermore, interference of ApoE/LRP1 interaction impaired the resolution of lung fibrosis in bleomycin-treated WT mice. In contrast, supplementation of ApoE promoted this process in ApoE-/- animals. In conclusion, Mo-AM-derived ApoE is beneficial to the resolution of lung fibrosis, supporting the notion that Mo-AMs may have distinct functions in different phases of lung fibrogenesis. The findings also suggest a potentially novel therapeutic target for treating lung fibrosis, to which effective remedies remain scarce.