The proepicardium (PE) migrates over the heart and forms the epicardium. A subset of these PE-derived cells undergoes epithelial–mesenchymal transformation (EMT) and gives rise to cardiac fibroblasts and components of the coronary vasculature. We report that transforming growth factor-β (TGFβ) 1 and TGFβ2 increase EMT in PE explants as measured by invasion into a collagen gel, loss of cytokeratin expression, and redistribution of ZO1. The type I TGFβ receptors ALK2 and ALK5 are both expressed in the PE. However, only constitutively active (ca) ALK2 stimulates PE-derived epithelial cell activation, the first step in transformation, whereas caALK5 stimulates neither activation nor transformation in PE explants. Overexpression of Smad6, an inhibitor of ALK2 signaling, inhibits epithelial cell activation, whereas BMP7, a known ligand for ALK2, has no effect. These data demonstrate that TGFβ stimulates transformation in the PE and suggest that ALK2 partially mediates this effect. Developmental Dynamics 235:50–59, 2006. © 2005 Wiley-Liss, Inc.