RATIONALE Airway hyperreactivity and remodeling are characteristic features of asthma. Interactions between the airway epithelium and environmental allergens are believed to be important in driving development of pathology, particularly because altered epithelial gene expression is common in individuals with asthma. OBJECTIVES To investigate the interactions between a modified airway epithelium and a common aeroallergen in vivo. METHODS We used an adenoviral vector to generate mice overexpressing the transforming growth factor-beta signaling molecule, Smad2, in the airway epithelium and exposed them to house dust mite (HDM) extract intranasally. MEASUREMENTS AND MAIN RESULTS Smad2 overexpression resulted in enhanced airway hyperreactivity after allergen challenge concomitant with changes in airway remodeling. Subepithelial collagen deposition was increased and smooth muscle hyperplasia was evident resulting in thickening of the airway smooth muscle layer. However, there was no increase in airway inflammation in mice given the Smad2 vector compared with the control vector. Enhanced airway hyperreactivity and remodeling did not correlate with elevated levels of Th2 cytokines, such as IL-13 or IL-4. However, mice overexpressing Smad2 in the airway epithelium showed significantly enhanced levels of IL-25 and activin A after HDM exposure. Blocking activin A with a neutralizing antibody prevented the increase in lung IL-25 and inhibited subsequent collagen deposition and also the enhanced airway hyperreactivity observed in the Smad2 overexpressing HDM-exposed mice. CONCLUSIONS Epithelial overexpression of Smad2 can specifically alter airway hyperreactivity and remodeling in response to an aeroallergen. Moreover, we have identified novel roles for IL-25 and activin A in driving airway hyperreactivity and remodeling.