TGF-β1 is overexpressed in wound repair and in most proliferative disorders including benign prostatic hyperplasia and prostate cancer. The stromal microenvironment at these sites is reactive and typified by altered phenotype, matrix deposition, inflammatory responses, and alterations in nerve density and biology. TGF-β1 is known to modulate several stromal responses; however there are few transgenic models to study its integrated biology. To address the actions of TGF-β1 in prostate disorders, we targeted expression of an epitope tagged and constitutively active TGF-β1 via the enhanced probasin promoter to the murine prostate gland epithelium. Transgenic mice developed age-dependent lesions leading to severe, yet focal attenuation of epithelium, and a discontinuous basal lamina. These changes were associated with elevated fibroplasia and frequency of collagenous micronodules in collapsed acini, along with an induced inflammation in nerve ganglia and small vessels. Elevated recruitment of CD115+ myeloid cells but not mature macrophages was observed in nerve ganglia, also in an age-dependent manner. Similar phenotypic changes were observed using a human prostate epithelium tissue recombination xenograft model, where epithelial cells engineered to overexpress TGF-β1 induced fibrosis and altered matrix deposition concurrent with inflammation in the stromal compartment. Together, these data suggest that elevated TGF-β1 expression induces a fibroplasia stromal response associated with breach of epithelial wall structure and inflammatory involvement of nerve ganglia and vessels. The novel findings of ganglia and vessel inflammation associated with formation of collagenous micronodules in collapsed acini is important as each of these are observed in human prostate carcinoma and may play a role in disease progression.