Recent evidence suggests that bone marrow (BM)-derived cells may integrate into the kidney, giving rise to functional renal cell types, including endothelial and epithelial cells and myofibroblasts. BM-derived cells can contribute to repair of the renal peritubular capillary (PTC) network following acute ischemic injury. However, the cell fate and regulation of BM-derived cells during the progression of chronic renal disease remains unclear. Using chimeric mice transplanted with enhanced green fluorescent protein (EGFP)-expressing BM, we demonstrate that the number of BM-derived myofibroblasts coincided with the development of fibrosis in a mouse adriamycin (ADR)-induced nephrosis model of chronic, progressive renal fibrosis. Four weeks after ADR injection, increased numbers of BM-derived myofibroblasts were observed in the interstitium of ADR-injected mice. Six weeks after ADR injection, more than 30% of renal α-smooth muscle actin (+) (α-SMA+) interstitial myofibroblasts were derived from the BM. In addition, BM-derived cells were observed to express the endothelial cell marker CD31 and the myofibroblast marker α-SMA. Blockade of p38 mitogen-activated protein kinase (MAPK) and transforming growth factor (TGF)-β1/Smad2 signaling was found to protect BM-derived PTC endothelial cells and inhibit the number of BM-derived von Willebrand factor (vWF)(+)/EGFP(+)/α-SMA(+) cells, EGFP(+)/α-SMA(+) cells, and total α-SMA(+) cells in ADR-injected mice. Inhibition of the p38 MAPK and TGF-β1/Smad signaling pathways enhanced PTC repair by decreasing endothelial-myofibroblast transformation, leading to structural and functional renal recovery and the attenuation of renal interstitial fibrosis. Investigation of the signaling pathways that regulate the differentiation and survival of BM-derived cells in a progressive disease setting is vital for the successful development of cell-based therapies for renal repair.