Idiopathic pulmonary fibrosis (IPF) is a chronic, progressive lung disease characterized by excessive scarring and impaired lung function, with no effective cure. The immune response, particularly macrophages, plays a pivotal role in the pathogenesis and progression of IPF. Although macrophages accumulate in fibrotic lungs, their specific roles and interactions with other cells and the extracellular matrix (ECM) in sustaining fibrosis remain poorly understood. Our study utilized a 3D fibrotic microtissue model to investigate the intricate interplay between macrophages, fibroblasts, and epithelial cells within the fibrotic microenvironment. We demonstrated that stiff, aligned ECM fibers mechanically activated macrophages, driving a self-perpetuating cycle of fibrosis by promoting the co-alignment of macrophages, fibroblasts, and collagen fibers. Importantly, the anti-fibrotic drug Pirfenidone disrupts this cycle by inhibiting macrophage activation through suppression of integrin αMβ2 and Rho-associated coiled-coil containing protein kinase 2. Furthermore, we revealed that macrophage-epithelial cell interactions contributed to epithelial cell plasticity and ‘aberrant’ repair. Increased ECM stiffness and microtissue tension further exacerbated this aberrant phenotype. These findings highlight the critical roles of macrophage activation, ECM mechanics, and epithelial-immune interactions in IPF pathogenesis. Targeting these mechanisms offers a promising therapeutic strategy to disrupt the fibrotic cycle. Our 3D microtissue model provides a valuable platform for studying these complex interactions and evaluating novel antifibrotic therapies.