The response of alveolar epithelial cells (AECs) to lung injury plays a central role in the pathogenesis of pulmonary fibrosis, but the mechanisms by which AECs regulate fibrotic processes are not well defined. We aimed to elucidate how transforming growth factor-β (TGFβ) signaling in lung epithelium impacts lung fibrosis in the intratracheal bleomycin model. Mice with selective deficiency of TGFβ receptor 2 (TGFβR2) in lung epithelium were generated and crossed to cell fate reporter mice that express β-galactosidase (β-gal) in cells of lung epithelial lineage. Mice were given intratracheal bleomycin (0.08 U), and the following parameters were assessed: AEC death by terminal deoxynucleotidyl transferase dUTP-mediated nick-end labeling assay, inflammation by total and differential cell counts from bronchoalveolar lavage, fibrosis by scoring of trichrome-stained lung sections, and total lung collagen content. Mice with lung epithelial deficiency of TGFβR2 had improved AEC survival, despite greater lung inflammation, after bleomycin administration. At 3 wk after bleomycin administration, mice with epithelial TGFβR2 deficiency showed a significantly attenuated fibrotic response in the lungs, as determined by semiquantitatve scoring and total collagen content. The reduction in lung fibrosis in these mice was associated with a marked decrease in the lung fibroblast population, both total lung fibroblasts and epithelial-to-mesenchymal transition-derived (S100A4(+)/β-gal(+)) fibroblasts. Attenuation of TGFβ signaling in lung epithelium provides protection from bleomycin-induced fibrosis, indicating a critical role for the epithelium in transducing the profibrotic effects of this cytokine.