Liver fibrosis is characterized by accumulation of extracellular matrix, and activated hepatic stellate cells (HSCs) are the primary source of the fibrotic neomatrix and considered as therapeutic target cells. We previously showed that albumin in pancreatic stellate cells (PSCs), the key cell type for pancreatic fibrogenesis, is directly involved in the formation of vitamin A-containing lipid droplets, inhibiting PSC activation. In this study, we evaluated the anti-fibrotic activity of both albumin and retinol binding protein-albumin domain III fusion protein (R-III), designed for stellate cell-targeted delivery of albumin III, in rat primary HSCs and investigated the underlying mechanism. Forced expression of albumin or R-III in HSCs after passage 2 (activated HSCs) induced lipid droplet formation and deactivated HSCs, whereas point mutations in high-affinity fatty acid binding sites of albumin domain III abolished their activities. Exogenous R-III, but not albumin, was successfully internalized into and deactivated HSC-P2. When HSCs at day 3 after plating (pre-activated HSCs) were cultured in the presence of purified R-III, spontaneous activation of HSCs was inhibited even after passage 2, suggestive of a potential for preventive effect. Furthermore, treatment of HSCs-P2 with R-III led to a significant reduction in both cytoplasmic levels of all-trans retinoic acid and the subsequent retinoic acid signaling. Therefore, our data suggest that albumin deactivates HSCs with reduced retinoic acid levels and that R-III may have therapeutic and preventive potentials on liver fibrosis.