Renal fibrosis is the common pathway in the progression of chronic kidney disease (CKD). Acyloxyacyl hydrolase (AOAH) is expressed in various phagocytes and is highly expressed in proximal tubular epithelial cells (PTECs). Research shows that AOAH plays a critical role in infections and chronic inflammatory diseases, although its role in kidney injury is unknown. Here, we found that AOAH deletion led to exacerbated kidney injury and fibrosis after folic acid (FA) administration, which was reversed by overexpression of Aoah in kidneys. ScRNA-seq revealed that Aoah-/- mice exhibited increased subpopulation of CD74+ PTECs, though the percentage of total PTECs were decreased compared to WT mice after FA treatment. Additionally, exacerbated kidney injury and fibrosis seen in Aoah-/- mice was attenuated via administration of methyl ester of (S, R)-3-(4-hydroxyphenyl)-4,5-dihydro-5-isoxazole acetic acid (ISO-1), an inhibitor of macrophage inhibition factor (MIF) and CD74 binding. Finally, AOAH expression was found positively correlated with estimated glomerular filtration rate while negatively correlated with the degree of renal fibrosis in kidneys of CKD patients. Thus, our work indicates that AOAH protects against kidney injury and fibrosis by inhibiting renal tubular epithelial cells CD74 signaling pathways. Targeting kidney AOAH represents a promising strategy to prevent renal fibrosis progression.