Inflammation-associated fibroblasts (IAFs) are associated with progression and drug resistance of chronic inflammatory diseases such as inflammatory bowel disease (IBD), but their direct impact on epithelial cells is unknown. Here, we developed an in vitro model whereby human colon fibroblasts are induced by specific cytokines and recapitulate key features of IAFs in vivo. When cocultured with patient-derived colon organoids (colonoids), IAFs induced rapid colonoid expansion and barrier disruption due to swelling and rupture of individual epithelial cells. Colonoids cocultured with IAFs also show increased DNA damage, mitotic errors, and proliferation arrest. These IAF-induced epithelial defects are mediated by a paracrine pathway involving prostaglandin E2 and its receptor EP4, leading to protein kinase A -dependent activation of the cystic fibrosis transmembrane conductance regulator. EP4-specific chemical inhibitors effectively prevented IAF-induced colonoid swelling and restored normal proliferation and genome stability. These findings reveal a mechanism by which IAFs could promote and perpetuate IBD and suggest a therapeutic avenue to mitigate inflammation-associated epithelial injury.