Induction of epithelial-myofibroblast transition (EMyT), a robust fibrogenic phenotype change hallmarked by α-smooth muscle actin (SMA) expression, requires transforming growth factor-β1 (TGFβ) and the absence/uncoupling of intracellular contacts. This suggests that an "injured" epithelium may be topically susceptible to TGFβ. To explore this concept, we use an epithelial wound model in which intact and contact-deprived regions of the same monolayer can be analyzed simultaneously. We show that TGFβ elicits dramatically different responses at these two loci. SMA expression and initially enhanced nuclear Smad3 accumulation followed by Smad3 mRNA and protein down-regulation occur exclusively at the wound. Mechanistically, three transcriptional coactivators whose localization is regulated by cell contact integrity are critical for these local effects. These are myocardin-related transcription factor (MRTF), the driver of the SMA promoter; β-catenin, which counteracts the known inhibitory effect of Smad3 on MRTF and maintains MRTF protein stability and mRNA expression in the wound; and TAZ, a Hippo effector and Smad3 retention factor. Remarkably, active TAZ stimulates the SMA and suppresses the Smad3 promoter, whereas TAZ silencing prevents wound-restricted expression of SMA and loss of Smad3. Such locus-specific reprogramming might play key roles in wound healing and the susceptibility of the injured epithelium to fibrogenesis.