TGF-β is a pathogenic factor in patients with acute respiratory distress syndrome (ARDS), a condition characterized by alveolar edema. A unique TGF-β pathway is described, which rapidly promoted internalization of the αβγ epithelial sodium channel (ENaC) complex from the alveolar epithelial cell surface, leading to persistence of pulmonary edema. TGF-β applied to the alveolar airspaces of live rabbits or isolated rabbit lungs blocked sodium transport and caused fluid retention, which-together with patch-clamp and flow cytometry studies-identified ENaC as the target of TGF-β. TGF-β rapidly and sequentially activated phospholipase D1, phosphatidylinositol-4-phosphate 5-kinase 1α, and NADPH oxidase 4 (NOX4) to produce reactive oxygen species, driving internalization of βENaC, the subunit responsible for cell-surface stability of the αβγENaC complex. ENaC internalization was dependent on oxidation of βENaC Cys(43). Treatment of alveolar epithelial cells with bronchoalveolar lavage fluids from ARDS patients drove βENaC internalization, which was inhibited by a TGF-β neutralizing antibody and a Tgfbr1 inhibitor. Pharmacological inhibition of TGF-β signaling in vivo in mice, and genetic ablation of the nox4 gene in mice, protected against perturbed lung fluid balance in a bleomycin model of lung injury, highlighting a role for both proximal and distal components of this unique ENaC regulatory pathway in lung fluid balance. These data describe a unique TGF-β-dependent mechanism that regulates ion and fluid transport in the lung, which is not only relevant to the pathological mechanisms of ARDS, but might also represent a physiological means of acutely regulating ENaC activity in the lung and other organs.