Transforming growth factor-β (TGF-β) mediates growth-inhibitory effects on most target cells via activation of the canonical SMAD signaling pathway. This growth-inhibitory activity may be coupled with cellular differentiation. Our studies demonstrate that TGF-β1 inhibits proliferation of primary, non-transformed human lung fibroblasts in association with the induction of myofibroblast differentiation. Differentiated myofibroblasts maintain the capacity to proliferate in response to exogenous mitogenic stimuli and are resistant to serum deprivation-induced apoptosis. These proliferative and anti-apoptotic properties of myofibroblasts are related, in part, to the down-regulation of caveolin-1 (Cav-1) by TGF-β1. Cav-1 down-regulation is mediated by early activation of p38 MAPK and does not require SMAD signaling. In contrast, myofibroblast differentiation is dependent on activation of the SMAD pathway, but not on p38 MAPK. Thus, combinatorial signaling by TGF-β1 of myofibroblast differentiation and down-regulation of Cav-1 by SMAD and p38 MAPK pathways, respectively, confer proliferative and apoptosis-resistant properties to myofibroblasts. Selective targeting of this SMAD-independent, p38-MAPK/Cav-1-dependent pathway is likely to be effective in the treatment of pathological conditions characterized by TGF-β signaling and myofibroblast activation.