Epithelial-myofibroblast (MF) transition (EMyT) is a critical process in organ fibrosis, leading to alpha-smooth muscle actin (SMA) expression in the epithelium. The mechanism underlying the activation of this myogenic program is unknown. We have shown previously that both injury to intercellular contacts and transforming growth factor beta (TGF-beta) are indispensable for SMA expression (two-hit model) and that contact disruption induces nuclear translocation of myocardin-related transcription factor (MRTF). Because the SMA promoter harbors both MRTF-responsive CC(A/T)-rich GG element (CArG) boxes and TGF-beta-responsive Smad-binding elements, we hypothesized that the myogenic program is mobilized by a synergy between MRTF and Smad3. In this study, we show that the synergy between injury and TGF-beta exclusively requires CArG elements. Surprisingly, Smad3 inhibits MRTF-driven activation of the SMA promoter, and Smad3 silencing renders injury sufficient to induce SMA expression. Furthermore, Smad3 is degraded under two-hit conditions, thereby liberating the myogenic program. Thus, Smad3 is a critical timer/delayer of MF commitment in the epithelium, and EMyT can be dissected into Smad3-promoted (mesenchymal) and Smad3-inhibited (myogenic) phases.