CREB3L1 (cAMP response element binding protein 3-like 1), a transcription factor synthesized as a membrane-bound precursor and activated through Regulated Intramembrane Proteolysis (RIP), is essential for collagen production by osteoblasts during bone development. Here, we show that TGF-β (transforming growth factor-β), a cytokine known to stimulate production of collagen during wound healing and fibrotic diseases, induces proteolytic activation of CREB3L1 in human A549 cells. This activation results from inhibition of expression of TM4SF20 (transmembrane 4 L6 family member 20), which normally inhibits RIP of CREB3L1. Cleavage of CREB3L1 releases its NH2-terminal domain from membranes, allowing it to enter the nucleus where it binds to Smad4 to activate transcription of genes encoding proteins required for assembly of collagen-containing extracellular matrix. Our findings raise the possibility that inhibition of RIP of CREB3L1 could prevent excess deposition of collagen in certain fibrotic diseases.