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 Cys⁴³. 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.