Keloids, partially considered as benign tumors, are characterized by the overgrowth of fibrosis beyond the boundaries of the wound and are regulated mainly by transforming growth factor (TGF)-β1, which induces the transition of fibroblasts to myofibroblasts. Hypoxia is an important driving force in the development of lung and liver fibrosis by activating hypoxia inducible factor-1α and stimulating epithelial-mesenchymal transition. However, it is unknown whether and hypoxia can influence human dermal scarring. The aim of this study was to investigate whether hypoxia drives the transition of dermal fibroblasts to myofibroblasts and to clarify the potential transduction mechanisms involved. First, we observed that keloids are a relatively hypoxic tissue. Second, we found that hypoxia drives the transition of normal dermal fibroblasts to a myofibroblast-like phenotype [high expression of α-smooth muscle actin (α-SMA) and collagen I and III]. Finally, hypoxia effectively facilitated the nuclear import of the Smad2 and Smad3 complex, while blockade with the Smad3 inhibitor, SIS3, significantly impaired the expression of hypoxia-induced fibrosis-related molecules. Taken together, to the best of our knowledge, this study demonstrates for the first time that hypoxia facilitates the transition of dermal fibroblasts to myofibroblasts through the activation of the TGF-β1/Smad3 signaling pathway and our findings may provide a potential target for the treatment of keloids.