Idiopathic pulmonary fibrosis (IPF) is linked to mitochondrial oxidative stress in alveolar macrophages. Mitochondrial reactive oxygen species (mtROS) are important for cell homeostasis by regulating mitochondrial dynamics. Here, we show that Akt1 is activated in fibrotic macrophages and induces lung macrophage mtROS, which promotes the removal of dysfunctional mitochondria. Akt1-induced mitophagy in lung macrophages is required for macrophage-derived TGF-β1 expression, which promotes fibrosis development. Mice harboring a conditional deletion of Akt1 in macrophages (Akt1-/-Lyz2-cre) have impaired mitophagy that correlates with decreased mitochondrial DNA (mtDNA) and reduced ATP production. We determined that Akt1 activates peroxisome proliferator-activated receptor coactivator-1α (PGC-1α) by modulating p38 MAPK, thereby promoting mitochondrial biogenesis. Importantly, mice administered mdivi-1, a chemical inhibitor of mitochondrial division, were protected from bleomycin-induced mitochondrial fragmentation and pulmonary fibrosis. Moreover, IPF lung macrophages displayed evidence of increased mitophagy as well as mitochondrial biogenesis that is, in part, due to greater activation of Akt1. These observations suggest that macrophage Akt1-mediated mitochondrial dynamics maintains mitochondrial homeostasis and promotes the pathogenesis of pulmonary fibrosis.