Squamous metaplasia (SM) is common in smokers and is associated with airway obstruction in chronic obstructive pulmonary disease (COPD). A major mechanism of airway obstruction in COPD is thickening of the small airway walls. We asked whether SM actively contributes to airway wall thickening through alteration of epithelial-mesenchymal interactions in COPD. Using immunohistochemical staining, airway morphometry, and fibroblast culture of lung samples from COPD patients; genome-wide analysis of an in vitro model of SM; and in vitro modeling of human airway epithelial-mesenchymal interactions, we provide evidence that SM, through the increased secretion of IL-1β, induces a fibrotic response in adjacent airway fibroblasts. We identify a pivotal role for integrin-mediated TGF-β activation in amplifying SM and driving IL-1β–dependent profibrotic mesenchymal responses. Finally, we show that SM correlates with increased severity of COPD and that fibroblast expression of the integrin α_vβ₈, which is the major mediator of airway fibroblast TGF-β activation, correlated with disease severity and small airway wall thickening in COPD. Our findings have identified TGF-β as a potential therapeutic target for COPD.