Alveolar epithelial cell (AEC) injury and apoptosis are prominent pathological features of idiopathic pulmonary fibrosis (IPF). There is evidence of AEC plasticity in lung injury repair responses and in IPF. In this report, we explore the role of focal adhesion kinase (FAK) signaling in determining the fate of lung epithelial cells in response to TGF-β1. Rat type II alveolar epithelial cells (RLE-6TN) were treated with or without TGF-β1, and the expression of mesenchymal phenotype and function were analyzed. Pharmacologic protein kinase inhibitors were utilized to screen for SMAD-dependent and -independent pathways. SMAD and FAK signaling were analyzed using siRNA knockdown, inhibitors, and expression of mutant constructs of FAK. Apoptosis was measured using cleaved caspase-3 analysis and TUNEL staining. TGF-β1 induced the acquisition of mesenchymal markers, including α-smooth muscle actin, in RLE-6TN cells and enhanced the contraction of 3D collagen gels. This phenotypic transition or plasticity, epithelial-myofibroblast plasticity (EMP), is dependent on SMAD2/3 and FAK signaling. FAK activation was found to be dependent on ALK5/SMAD3 signaling. We observed that TGF-β1 induces both EMP and apoptosis in the same cell culture system, but not in the same cell. While blockade of SMAD signaling inhibits EMP, it has a minimal effect on apoptosis; in contrast, inhibition of FAK signaling markedly shifts AECs to an apoptotic fate. The data support that FAK activation determines whether AECs undergo EMP vs. apoptosis in response to TGFβ-1 stimulation. TGFβ-1-induced EMP is FAK-dependent; whereas, TGFβ-1-induced apoptosis in AECs is favored when FAK signaling is inhibited.