Glomerular matrix accumulation is a hallmark of diabetic nephropathy. Recent studies showed that overexpression of the transcription factor SREBP-1 induces glomerulosclerosis. TGFβ1 is a key profibrotic mediator of glomerulosclerosis, but whether SREBP-1 regulates its effects is unknown. In kidney mesangial cells and in vivo, TGFβ1 activates SREBP-1. This requires SCAP, S1P, and PI3K/Akt signaling, but is independent of Smad3. Activation of the TGFβ1-responsive reporter plasmid p3TP-lux requires SREBP-1a, but not SREBP-1c, binding to an E-box adjacent to a Smad-binding element. SREBP-1a overexpression alone activates p3TP-lux. Smad3 is required for SREBP-1a transcriptional activation and TGFβ1 induces association between the two transcription factors. SREBP-1a K333 acetylation by the acetyltransferase CBP is required for Smad3 association and SREBP-1 transcriptional activity, and is also required for Smad3 transcriptional activity. Thus, both Smad3 and SREBP-1a activation cooperatively regulate TGFβ transcriptional responses. SREBP-1 inhibition provides a novel therapeutic strategy for diabetic kidney disease.