The intracellular signaling mechanisms through which TGFβ regulates pulmonary development are incompletely understood. Canonical TGFβ signaling involves Smad2/3 phosphorylation, Smad2/3·Smad4 complex formation and nuclear localization, and gene regulation. Here we show that physiologically relevant TGFβ1 levels also stimulate Smad1/5 phosphorylation, typically a mediator of bone morphogenetic protein (BMP) signaling, in mouse pup pulmonary artery smooth muscle cells (mPASMC) and lung fibroblasts and other interstitial lung cell lines. This crosstalk mechanism likely has in vivo relevance because mixed Smad1/5/8·Smad2/3 complexes, which are indicative of TGFβ-stimulated Smad1/5 activation, were detected in the developing mouse lung using a proximity ligation assay. Although mixed Smad complexes have been shown not to transduce nuclear signaling, we determined that TGFβ stimulates nuclear localization of phosphorylated Smad1/5 and induces the expression of prototypical BMP-regulated genes in the mPASMC. Small molecule kinase inhibitor studies suggested that TGFβ-regulated Smad1/5 phosphorylation in these cells is mediated by TGFβ-type I receptors, not BMP-type I receptors, but possibly the accessory ALK1 receptor. Although work by others suggested that ALK1 is expressed exclusively in endothelial cells in the vasculature, we detected ALK1 mRNA and protein expression in mPASMC in vitro and in mouse pup lungs. Moreover, using an anti-murine ALK1 antibody and mPASMC, we determined that ALK1 regulates Smad1/5 phosphorylation by TGFβ. Together, these studies characterize an accessory TGFβ-stimulated BMP R-Smad signaling mechanism in interstitial cells of the developing lung. They also indicate the importance of considering alternate Smad pathways in studies directed at determining how TGFβ regulates newborn lung development.