Idiopathic pulmonary fibrosis (IPF) is a severe, diffuse, progressive, and fibrosing interstitial disease leading to respiratory failure and death in the absence of organ transplantation. Substantial evidence has confirmed the pivotal role of fibroblasts in the progression of IPF, yet effective therapeutic options are scarce. Single-cell transcriptomics profiling revealed that among the diverse fibroblast subsets, FAP1+ alveolar fibroblasts (AFs) were pivotal for the progression of IPF. On the basis of these findings, we developed FAP1-targeting chimeric antigen receptor cytotoxic effector regulatory T cells (CAR-cTregs), which leveraged the targeted killing advantage of the currently trending CAR-based immunotherapy for tumors and incorporated the immunosuppressive functions of Tregs to mitigate the inflammation caused by both the disease itself and CAR-T cell infusion. Accordingly, CAR-cTregs were constructed to effectively eliminate FAP1+ fibroblasts in vitro. This cytotoxic effect could be abrogated by inhibitors of the granzyme B/perforin pathway. In the bleomycin-induced PF model, CAR-cTregs were found to reverse fibrosis characterized by diminished recruitment of fibrocytes and improved remodeling of epithelial cells. Together, our results demonstrate that CAR-cTregs can serve as a promising therapeutic option for IPF and provide an alternative strategy for treating multiple chronic inflammatory diseases by inducing both cytotoxicity and immunosuppression.