We have shown that in patients with B2 Crohn’s disease constitutive p-STAT3 activation in mesenchymal cells results in increased TGF-β1 expression, TGF-β1-dependent Collagen-I production and fibrosis. In these cells, as expected p-Smad3 activation increases, yet the expected inhibition of increased Smad3-dependent TGF-β1 signaling by upregulation of inhibitory Smad-7 paradoxically does not occur. TargetScan analysis predicts Smad3 and STAT3 to regulate pre-miR-21 and pre-miR29b maturation and STAT3 to regulate pre-miR-21 maturation; Collagen I mRNA is a predicted target of miR-21 and miR-29b and Smad7 is a predicted target of miR-21. To determine the mechanisms regulating pre-miR-21 and pre-miR-29b maturation in mesenchymal cells from patients with fibrostenotic B2 Crohn’s disease and identify the miR-21-dependent and miR-29b-dependent mechanisms that could lead to fibrosis. Mesenchymal cells (smooth muscle cells and subepithelial myofibroblasts) were isolated from the affected ileum and normal resection margin in the same patient with inflammatory (B1), fibrostenotic (B2), or penetrating (B3) Crohn’s disease or non-Crohn’s subjects. Isolated cells were used to prepare miRNA, mRNA, protein lysates, nuclear fractions or initiate primary cell cultures. miR-21, miR-29b, Smad7, Collagen-I expression were measured by qRT-PCR. Factors regulating maturation of pre-miRs were determined using RNA-ChIP. The regulation of miRNA target mRNA was determined using transfection of miR-21, miR-29b, antagomiR-21, antagomiR-29b or scrambled sense. STAT3 and Smad3 knock-down was accomplished using siRNA. The role of miR-21 was investigated using the 6-week chronic TNBS colitis model in C56Bl/6J mice treated with antagomiR-21 oligonucleotide (10 mg/kg/wk i.p weekly). Expression of miR-21 increased and miR-29b decreased in mesenchymal cells of affected ileum compared to normal ileum in the same patient and to non-Crohn’s subjects. The opposite was seen in B3 patients with no change in B1 patients. In cells from B2 patients, p-STAT3 bound to pre-miR21; binding was inhibited by the STAT3 inhibitor, Stattic. p-Smad3 bound to both pre-miR-21 and pre-miR-29b; binding to both was inhibited by the Smad3 inhibitor, SIS3. Knock-down of Smad3 increased miR-29b and decreased miR-21, whereas, knockdown of STAT3 decreased miR-21 but did not affect miR-29b. Transfection of miR-21 decreased Smad7 and increased collagen I expression, whereas transfection of miR-29b decreased collagen-I expression but did not affect Smad7. The opposite pattern was seen following transfection of antagomiR-21 and antagomiR-29b. In mice treated with antagomir-21, i-Smad7 expression was restored, TGF-β1-dependent collagen I production was inhibited along with the development of fibrosis. Expression of pro-fibrotic miR-21 is increased by p-STAT3 and p-Smad3 in affected regions of patients with fibrostenotic Crohn’s disease. Increased miR-21 decreases abundance of Smad7 transcripts accounting for paradoxically decreased inhibitory Smad7. Inhibition of anti-fibrotic miR-29b by p-Smad3 caused loss of negative regulation of Collagen-I. Taken together the observed increase in miR-21 and decrease in miR-29b expression can result in overactive and unopposed TGF-β1 signaling and TGF-β1-dependent collagen-I expression and fibrosis in patients with B2 fibrostenotic Crohn’s disease.