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Mucosal healing is associated with better clinical outcomes in patients with inflammatory bowel disease. But the epithelial-specific contribution to mucosal healing in vivo is poorly understood. We evaluated mucosal healing in an acute dextran sulfate sodium mouse model that shows an alleviated colitis response after epithelial-specific loss of Smad4. We find that enhanced epithelial wound healing alleviates the fibrotic response. Dextran sulfate sodium caused increased mesenchymal collagen deposition—indicative of fibrosis—within a week in the WT but not in the Smad4 KO colon. The fibrotic response correlated with decreased epithelial proliferation in the WT, whereas uninterrupted proliferation and an expanded zone of proliferation were observed in the Smad4 KO colon epithelium. Furthermore, the Smad4 KO colon showed epithelial extracellular matrix alterations that promote epithelial regeneration. Our data suggest that epithelium is a key determinant of the mucosal healing response in vivo, implicating mucosal healing as a strategy against fibrosis in inflammatory bowel disease patients.