Although fibroblasts are dormant in normal tissue, they exhibit explosive activation during wound healing and perpetual activation in pathologic fibrosis and cancer stroma. The key regulatory network controlling these fibroblast dynamics is still unknown. Here, we report that Twist1, a key regulator of cancer-associated fibroblasts, directly upregulates Prrx1, which, in turn, increases the expression of Tenascin-C (TNC). TNC also increases Twist1 expression, consequently forming a Twist1-Prrx1-TNC positive feedback loop (PFL). Systems biology studies reveal that the Twist1-Prrx1-TNC PFL can function as a bistable ON/OFF switch and regulates fibroblast activation. This PFL can be irreversibly activated under pathologic conditions, leading to perpetual fibroblast activation. Sustained activation of the Twist1-Prrx1-TNC PFL reproduces fibrotic nodules similar to idiopathic pulmonary fibrosis in vivo and is implicated in fibrotic disease and cancer stroma. Considering that this PFL is specific to activated fibroblasts, Twist1-Prrx1-TNC PFL may be a fibroblast-specific therapeutic target to deprogram perpetually activated fibroblasts.