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Human amnion epithelial cells (hAECs) have attracted recent attention as a promising source of cells for regenerative therapies, with reports that cells derived from human term amnion possess multipotent differentiation ability, low immunogenicity, and anti-inflammatory properties. Specifically, in animal models of lung disease characterized by significant loss of lung tissue secondary to chronic inflammation and fibrosis, the transplantation of hAECs has been shown to reduce both inflammation and subsequent fibrosis. To further explore the mechanisms by which hAECs reduce pulmonary fibrosis and enhance lung regeneration, we utilized a bleomycin-induced model of pulmonary fibrosis and investigated the ability of hAECs to reduce fibrosis and thereby improve pulmonary function. We aimed to determine if hAECs, injected into the peritoneal cavity could migrate to the lung, engraft, and form functional lung epithelium, and whether hAECs could modulate the inflammatory environment in the bleomycin-injured lung. We demonstrated that, compared to bleomycin alone, IP administration of hAECs 24 h after bleomcyin, decreased gene expression of the proinflammatory cytokines TNF-α, TGF-β, IFN-γ, and IL-6 and decreased subsequent pulmonary fibrosis with less pulmonary collagen deposition, reduced levels of α-smooth muscle actin and decreased inflammatory cell infiltrate. We also showed that hAECs are able to prevent a decline in pulmonary function associated with bleomycin-induced lung damage. We were unable to detect any significant engraftment of hAECs in injured, or uninjured, lung after administration. The findings from this study support the further investigation of hAECs as a potential cell therapy for inflammatory and fibrogenic diseases.