We recently found that polyunsaturated lecithin prevents ethanol from causing cirrhosis in the baboon. Because transformation of lipocytes to transitional cells plays a key role in hepatic fibrogenesis in vivo, and because this process in alcohol‐fed baboons was found to be attenuated by polyunsaturated lecithin, we focused on lipocytes to study the mechanism of the protective effect. Rat lipocytes cultured on plastic undergo spontaneous activation, accompanied by expression of α‐smooth muscle actin isoform and production of substantial amounts of type I collagen. The latter was further increased on incubation with acetaldehyde. This in vitro model was used here to study how acetaldehyde‐mediated collagen production and accumulation can be turned off. Addition of polyunsaturated lecithin (10 μmol/L) was found to prevent the acetaldehyde‐induced increase in collagen accumulation by 83% (p < 0.001). By contrast, a saturated phospholipid (10 μmol/L dilauroyl phosphatidylcholine), a monounsaturated one (10 μmol/L linoleoylpalmitoyl phosphatidylcholine) or linoleic acid (20 μmol/L bound to albumin) had no such effect. Incorporation of [3H]proline into collagen and the expression of ä‐1 (I) procollagen mRNA were increased by acetaldehyde; the latter was not significantly affected by polyunsaturated lecithin. Polyunsaturated lecithin increased lipocyte collagenase activity by 100% (p < 0.001), whereas dilauroyl phosphatidylcholine, linoleoyl‐palmitoyl phosphatidylcholine and linoleic acid had no such action. We concluded that (a) polyunsaturated lecithin selectively prevents the acetaldehyde‐induced increase in collagen accumulation in lipocyte cultures, whereas other phospholipids or linoleate have no such effect; and (b) polyunsaturated lecithin does not modify the acetaldehydemediated increase in ä‐1 (I) procollagen mRNA, but it increases collagenase activity, suggesting that the protective effect exerted by polyunsaturated lecithin against alcohol induced fibrosis in vivo is due at least in part to stimulation of collagenase activity, which may prevent excess collagen accumulation by offsetting increased collagen production. (Hepatology 1992;15:373–381).