In catabolic conditions such as aging and diabetes, IGF signaling is impaired and fibrosis develops in skeletal muscles. To examine whether impaired IGF signaling initiates muscle fibrosis, we generated IGF-IR+/- heterozygous mice by crossing loxP-floxed IGF-IR (exon 3) mice with MyoD-cre mice. IGF-IR+/- mice were studied because we were unable to obtain homozygous IGF-IR-KO mice. In IGF-IR+/- mice, both growth and expression of myogenic genes (MyoD and myogenin; markers of satellite cell proliferation and differentiation, respectively) were depressed. Likewise, in injured muscles of IGF-IR+/- mice, there was impaired regeneration, depressed expression of MyoD and myogenin, and increased expression of TGF-beta 1, alpha-SMA, collagen I, and fibrosis. To uncover mechanisms stimulating fibrosis, we isolated satellite cells from muscles of IGF-IR+/- mice and found reduced proliferation and differentiation plus increased TGF-beta 1 production. In C2C12 myoblasts (a model of satellite cells), IGF-I treatment inhibited TGF-beta 1-stimulated Smad3 phosphorylation, its nuclear translocation, and expression of fibronectin. Using immunoprecipitation assay, we found an interaction between p-Akt or Akt with Smad3 in wild-type mouse muscles and in C2C12 myoblasts; importantly, IGF-I increased p-Akt and Smad3 interaction, whereas TGF-beta 1 decreased it. Therefore, in muscles of IGF-IR+/- mice, the reduction in IGF-IR reduces p-Akt, allowing for dissociation and nuclear translocation of Smad3 to enhance the TGF-beta 1 signaling pathway, leading to fibrosis. Thus, strategies to improve IGF signaling could prevent fibrosis in catabolic conditions with impaired IGF signaling.