Recessive dystrophic epidermolysis bullosa (RDEB) is a rare genetic skin disease caused by loss of function mutations in the gene encoding type VII collagen (COL7A1). RDEB is characterized by trauma induced wounds and excessive scarring, and one of the most frequent complications in RDEB is the development of fatal squamous cell carcinoma (SCC). Our published and unpublished data show that TGF-beta signaling is increased in RDEB, and others have shown that TGF-beta is a major disease modifier. We previously demonstrated that the matricellular protein thrombospondin-1 (TSP1) is increased in RDEB fibroblasts and that COL7A1 expression modulates TSP1. Here we investigated the role of TSP1 in TGF-beta activation in RDEB primary fibroblasts. Knock-down of TSP1 reduced phosphorylation of SMAD3 (a downstream target of TGF-beta signaling) in RDEB patient fibroblasts, but not in non-RDEB normal breast fibroblasts. Over-expression of COL7A1 in RDEB fibroblasts reduced intracellular TSP1 and phosphorylated SMAD3. Furthermore, peptide inhibition of TSP1 binding to the TGF-beta – latency associated protein complex decreased nuclear localization of phosphorylated SMAD3 in tissue engineered extracellular matrix (ECM) from RDEB fibroblasts compared with controls and to a similar extent as observed after SB-431542 inhibition of the TGF-beta type I receptor. Decreased nuclear phosphorylated SMAD3 correlated with a decrease in collagen fiber formation in tissue engineered ECM from RDEB fibroblasts treated with the peptide TSP1 inhibitor, as evaluated by picrosirius red staining followed by analyses of birefringent collagen fibrillar deposits using a polarizing microscope. These data suggest TSP1 is a major activator of TGF-beta signaling in RDEB and identify TSP1 as a potent therapeutic target.