In COPD, epithelial changes are prominent features in the airways, such as goblet cell hyperplasia and squamous metaplasia. In contrast, it remains unclear whether ciliated cells are reduced and which pathways dysregulate epithelial differentiation. We hypothesized that bronchial epithelial cell lineage specification is dysregulated in COPD because of an aberrant reprogramming through transforming growth factor (TGF)-β1. Surgical lung tissue from 81 COPD and 61 control (smokers and non-smokers) patients was assessed for bronchial epithelial cell phenotyping by immunohistochemistry, both in situ and in vitro in reconstituted air-liquid interface (ALI) cultures. The role of TGF-β1 was studied in vitro. COPD epithelium in large airways, when compared to controls, showed decreased β-tubulin IV + ciliated cells (4.4%, 2.5-8.8% versus 8.5%, 6.3-11.8% of surface staining, median and IQR, p = 0.0009) and increased MUC5AC + goblet cells (34.8%, 24.4-41.9% versus 10.3%, 5.1-17.6%, p < 0.0001). Both features were recapitulated in the ALI-cultured epithelium from COPD patients. Exogenous TGF-β1 reduced mucociliary differentiation while neutralizing TGF-β1 during ALI increased both specialized cell types. The COPD airway epithelium displays altered differentiation for ciliated cells, which recapitulates in vitro, at least in part through TGF-β1.