Myofibroblast differentiation induced by transforming growth factor-β (TGF-β) and characterized by de novo expression of smooth muscle (SM)-specific proteins is a key process in wound healing and in the pathogenesis of fibrosis. We have previously shown that TGF-β-induced expression and activation of serum response factor (SRF) is required for this process. In this study, we examined the signaling mechanism for SRF activation by TGF-β as it relates to pulmonary myofibroblast differentiation. TGF-β stimulated a profound, but delayed (18–24 h), activation of Rho kinase and formation of actin stress fibers, which paralleled SM α-actin expression. The translational inhibitor cycloheximide blocked these processes without affecting Smad-dependent gene transcription. Inhibition of Rho kinase by Y-27632 or depolymerization of actin by latrunculin B resulted in inhibition TGF-β-induced SRF activation and SM α-actin expression, having no effect on Smad signaling. Conversely, stabilization of actin stress fibers by jasplakinolide was sufficient to drive these processes in the absence of TGF-β. TGF-β promoted a delayed nuclear accumulation of the SRF coactivator megakaryoblastic leukemia-1 (MKL1)/myocardin-related transcription factor-A, which was inhibited by latrunculin B. Furthermore, TGF-β also induced MKL1 expression, which was inhibited by latrunculin B, by SRF inhibitor CCG-1423, or by SRF knockdown. Together, these data suggest a triphasic model for myofibroblast differentiation in response to TGF-β that involves 1) initial Smad-dependent expression of intermediate signaling molecules driving Rho activation and stress fiber formation, 2) nuclear accumulation of MKL1 and activation of SRF as a result of actin polymerization, and 3) SRF-dependent expression of MKL1, driving further myofibroblast differentiation.