During skin fibrosis, extracellular matrix proteins are overproduced, and resident lipid-filled mature dermal adipocytes are depleted in both human disease and mouse models. However, the mechanisms underlying this reduction in lipid-filled adipocytes during fibrosis are poorly understood. In this study, we found that adipocyte lipolysis through the rate-limiting enzyme Atgl is required for loss of adipose tissue during skin fibrosis in mice. We found that in 2 fibrotic mouse models, adipocyte lipolysis occurred early during skin fibrosis development, and lipid storage was re-established during fibrosis recovery. In mice lacking Atgl in adipocytes, maintenance of adipocyte lipid storage occurs in both chemical and genetic models of fibrosis development. Transcriptional analysis revealed the upregulation of lipid metabolism/lipolysis genes in the skin of patients with fibrosis. Interestingly, the loss of adipocyte Atgl-driven lipolysis resulted in precocious fibrotic remodeling of the dermal extracellular matrix in bleomycin-treated mice, as indicated by histological and transcriptional changes. These data suggest that dermal adipocyte-derived fatty acids prevent fibrotic extracellular matrix remodeling in fibroblasts during the development of fibrosis. Thus, we suggest that dermal adipocyte-derived fatty acids are released during fibrosis development and delay fibroblast fibrogenic responses, which may hold therapeutic potential for treating fibrotic diseases.