Alveolar macrophages (AMs) are crucial for lung homeostasis, and their dysfunction causes uncontrolled fibrotic responses and pulmonary disorders. Protein phosphatases control multiple cellular events. However, whether nuclear phosphatases cooperate with histone modifiers to affect pulmonary fibrosis progress remains obscure. Here, we identified pleckstrin homology domain and leucine-rich repeat protein phosphatase 1 (PHLPP1) as a key protective factor for pulmonary fibrosis. Transcriptomics and epigenomics data confirmed that PHLPP1 selectively targeted Kruppel-like factor 4 (KLF4) for transcriptional inhibition in AMs. Nuclear PHLPP1 directly bound and dephosphorylated histone deacetylase 8 (HDAC8) at serine 39, thereby enhancing its deacetylase enzyme activity and subsequently suppressing KLF4 expression via the decreased histone acetylation and chromatin accessibility. Thus, loss of PHLPP1 amplified KLF4-centric profibrotic transcriptional program in AMs, while intratracheal administration of Klf4-short hairpin RNA (shRNA) adeno-associated virus ameliorated lung fibrosis in PHLPP1-deficient mice. Our study implies that targeting decreased PHLPP1 in AMs might be a promising therapeutic strategy for pulmonary fibrosis.