Interactions between transforming growth factor-β (TGF-β) and Wnt are crucial to many biological processes, although specific targets, rationale for divergent outcomes (differentiation versus block of epithelial proliferation versus epithelial-mesenchymal transition (EMT)) and precise mechanisms in many cases remain unknown. We investigated β-catenin-dependent and transforming growth factor-β1 (TGF-β1) interactions in pulmonary alveolar epithelial cells (AEC) in the context of EMT and pulmonary fibrosis. We previously demonstrated that ICG-001, a small molecule specific inhibitor of the β-catenin/CBP (but not β-catenin/p300) interaction, ameliorates and reverses pulmonary fibrosis and inhibits TGF-β1-mediated α-smooth muscle actin (α-SMA) and collagen induction in AEC. We now demonstrate that TGF-β1 induces LEF/TCF TOPFLASH reporter activation and nuclear β-catenin accumulation, while LiCl augments TGF-β-induced α-SMA expression, further confirming co-operation between β-catenin- and TGF-β-dependent signaling pathways. Inhibition and knockdown of Smad3, knockdown of β-catenin and overexpression of ICAT abrogated effects of TGF-β1 on α-SMA transcription/expression, indicating a requirement for β-catenin in these Smad3-dependent effects. Following TGF-β treatment, co-immunoprecipitation demonstrated direct interaction between endogenous Smad3 and β-catenin, while chromatin immunoprecipitation (ChIP)-re-ChIP identified spatial and temporal regulation of α-SMA via complex formation among Smad3, β-catenin, and CBP. ICG-001 inhibited α-SMA expression/transcription in response to TGF-β as well as α-SMA promoter occupancy by β-catenin and CBP, demonstrating a previously unknown requisite TGF-β1/β-catenin/CBP-mediated pro-EMT signaling pathway. Clinical relevance was shown by β-catenin/Smad3 co-localization and CBP expression in AEC of IPF patients. These findings suggest a new therapeutic approach to pulmonary fibrosis by specifically uncoupling CBP/catenin-dependent signaling downstream of TGF-β. Direct evidence for molecular interdependence between transforming growth factor-β (TGF-β) and Wnt pathways in mesenchymal gene regulation during epithelial-mesenchymal transition (EMT) is limited. TGF-β induction of α-smooth muscle actin (α-SMA) involves ternary complex formation among Smad3, β-catenin, and CBP. TGF-β and β-catenin/CBP-dependent pathways coordinately regulate α-SMA induction. Inhibition of β-catenin/CBP-dependent effects of TGF-β suggests a novel therapeutic approach to EMT/fibrosis.