Lung injury and pulmonary fibrosis contribute to morbidity and mortality, and, in particular, are characterized as leading cause on confirmed COVID-19 death. To date, efficient therapeutic approach for such lung diseases is lacking. N-Acetylglucosamine (NAG), an acetylated derivative of glucosamine, has been proposed as a potential protector of lung function in several types of lung diseases. The mechanism by which NAG protects against lung injury, however, remains unclear. Here, we show that NAG treatment improves pulmonary function in bleomycin (BLM)-induced lung injury model measured by flexiVent system. At early phase of lung injury, NAG treatment results in silenced immune response by targeting ARG1⁺ macrophages activation, and, consequently, blocks KRT8⁺ transitional stem cell in the alveolar region to stimulate PDGF Rβ⁺ fibroblasts hyperproliferation, thereby attenuating the pulmonary fibrosis. This combinational depression of immune response and extracellular matrix deposition within the lung mitigates lung injury and pulmonary fibrosis induced by BLM. Our findings provide novel insight into the protective role of NAG in lung injury.