Accumulating evidence suggests that long non-coding RNAs (lncRNAs) participate in the formation and development of keloids, a benign tumor. In addition, lncRNA H19 has been shown to act on the biological processes of keloids. This study aimed to identify other important mechanisms of the effect of lncRNA H19 on keloid formation. The H19, miR-196b-5p, and SMAD family member 5 (SMAD5) expression levels were detected using quantitative reverse transcriptase polymerase chain reaction (qRT-PCR) and Western blotting. Subcellular localization of lncRNA H19 was detected using a nuclear–cytoplasmic separation assay. Cell viability and proliferation were measured using counting kit-8 and colony formation assays. Bax and Bcl-2 levels were examined using Western blot analysis. The interaction between H19 and miR-196b-5p or SMAD5 was verified using a dual-luciferase reporter assay. H19 and SMAD5 expression was upregulated in keloid tissue and fibroblasts, whereas miR-196b-5p expression was downregulated. Knockdown of H19, overexpression of miR-196b-5p, or knockdown of SMAD5 inhibited the viability and proliferation of keloid fibroblasts and promoted apoptosis. Overexpression of H19 or SMAD5 and knockdown of miR-196b-5p promoted viability and proliferation and inhibited apoptosis. miR-196b-5p was identified as a H19 sponge, and SMAD5 was identified as a miR-196b-5p target. The combination of lncRNA H19 and miR-196b-5p regulates SMAD5 expression and promotes keloid formation, thus providing a new direction for keloid treatment.