Loss of expression of the TGF-β superfamily coreceptor, the type III TGF-β receptor (TβRIII or betaglycan), occurs in a broad spectrum of human cancers including breast, lung, ovarian, pancreatic, prostate, and renal cell cancer. TβRIII suppresses cancer progression in vivo, at least in part, by reducing cancer cell motility. However, the mechanism by which TβRIII regulates migration is unknown. Here, we demonstrate an unexpected TGF-β signaling independent role for TβRIII in activating Cdc42, altering the actin cytoskeleton and reducing directional persistence to inhibit random migration of both cancer and normal epithelial cells. Functionally, TβRIII through its interaction with the scaffolding protein β-arrestin2, activates Cdc42 and inhibits migration. These studies identify a TGF-β independent homeostatic function for TβRIII in regulating cell migration.