Transforming growth factor-β (TGF-β) plays critical roles in numerous physiological and pathological responses. Cholesterol, a major plasma membrane component, can have pronounced effects on signaling responses. Cells continually monitor cholesterol content and activate multi-layered transcriptional and translational signaling programs, following perturbations to cholesterol homeostasis (e.g., statins, the commonly used cholesterol reducing drugs). Here, we studied the effects of a mild reduction in free (membrane-associated) cholesterol on distinct components of TGF-β-signaling pathways. Our findings reveal a new regulatory mechanism that enhances TGF-β signaling responses by acting downstream of receptor activation. Reduced cholesterol results in PKR-dependent eIF2α phosphorylation, which enhances c-Jun translation, leading in turn to higher levels of JNK-mediated c-Jun phosphorylation. Activated c-Jun enhances transcription and expression of Smad2/3. This leads to enhanced sensitivity to TGF-β stimulation, due to increased Smad2/3 expression and phosphorylation. The phospho/total Smad2/3 ratio remains unchanged, indicating that the effect is not due to altered receptor activity. We propose that cholesterol depletion induces overactivation of PKR, JNK and TGF-β-signaling, which together may contribute to the side effects of statins in diverse disease settings.