Asthma is a major cause of morbidity and mortality worldwide. It is characterized by airway dysfunction and inflammation. A key determinant of the asthma phenotype is infiltration of airway smooth muscle bundles by activated mast cells. We hypothesized that interactions between these cells promotes airway smooth muscle differentiation into a more contractile phenotype. In vitro coculture of human airway smooth muscle cells with beta-tryptase, or mast cells with or without IgE/anti-IgE activation, increased airway smooth muscle-derived TGF-beta1 secretion, alpha-smooth muscle actin expression and agonist-provoked contraction. This promotion to a more contractile phenotype was inhibited by both the serine protease inhibitor leupeptin and TGF-beta1 neutralization, suggesting that the observed airway smooth muscle differentiation was driven by the autocrine release of TGF-beta1 in response to activation by mast cell beta-tryptase. Importantly, in vivo we found that in bronchial mucosal biopsies from asthmatics the intensity of alpha-smooth muscle actin expression was strongly related to the number of mast cells within or adjacent to an airway smooth muscle bundle. These findings suggest that mast cell localization in the airway smooth muscle bundle promotes airway smooth muscle cell differentiation into a more contractile phenotype, thus contributing to the disordered airway physiology that characterizes asthma.