Biosynthesis of fibrillar collagen in the skin is precisely regulated to maintain proper tissue homeostasis; however, the molecular mechanisms involved in this process remain largely unknown. Transcription factor Fli1 has been shown to repress collagen synthesis in cultured dermal fibroblasts. This study investigated the role of Fli1 in regulation of collagen biosynthesis in mice skin in vivo using mice with the homozygous deletion of the C-terminal transcriptional activation (CTA) domain of the Fli1 gene (Fli1 ΔCTA/ΔCTA). Skin analyses of the Fli1 mutant mice revealed a significant upregulation of fibrillar collagen genes at mRNA level, as well as increased collagen content as measured by acetic acid extraction and hydroxyproline assays. In addition, collagen fibrils contained ultrastructural abnormalities including immature thin fibrils and very thick irregularly shaped fibrils, which correlated with the reduced levels of decorin, fibromodulin, and lumican. Fibroblasts cultured from the skin of Fli1 ΔCTA/ΔCTA mice maintained elevated synthesis of collagen mRNA and protein. Additional experiments in cultured fibroblasts have revealed that although Fli1 ΔCTA retains the ability to bind to the collagen promoter in vitro and in vivo, it no longer functions as transcriptional repressor. Together, these results establish Fli1 as a key regulator of the collagen homeostasis in the skin in vivo.