Transforming growth factor-beta (TGF-β) is a multifunctional cytokine that regulates cell proliferation, death, development or differentiation. In addition, TGF-β is considered a key mediator in fibrogenic processes, and signals either directly or indirectly through types I, II and III (TβRI, II, and III) receptor complexes. The type III TGF-β (TβRIII or betaglycan) is a transmembrane proteoglycan without a functional kinase domain, and is considered as a coreceptor to increase the affinity of ligand binding to TβRII. Little is studied on TGF-β and TβRIII (or betaglycan) signaling, while it is well known about TGF-β ligand and TβRII signaling. In this study, we investigated the effects of TβRIII expression on TGF-β induced differentiation, in view of the finding that TβRIII is significantly downregulated during TGF-β-induced differentiation in fibroblasts. TGF-beta induced alpha-SMA and Procollagen Type I expression were markedly inhibited in fibroblasts stably expressing TβRIII. Endogenous TβRIII expression did not alter the TβRI or TβRII levels, but inhibited Smad 2/3, Akt and ERK phosphorylation. The molecular mechanism of TβRIII action in TGF-β-induced differentiation is associated with both Smad-dependent and Smad-independent pathways. Our results suggest that TβRIII is a novel molecular target for regulation of TGF-β signaling in myofibroblast differentiation.