Autosomal dominant polycystic kidney disease (ADPKD) is characterized by the presence of numerous fluid-filled cysts, extensive fibrosis, and the progressive decline in kidney function. Transforming growth factor-β1 (TGF-β1), an important mediator for renal fibrosis and chronic kidney disease, is overexpressed by cystic cells compared with normal kidney cells; however, its role in PKD pathogenesis remains undefined. To investigate the effect of TGF-β1 on cyst growth, fibrosis, and disease progression, we overexpressed active TGF-β1 specifically in collecting ducts (CDs) of phenotypic normal (Pkd1^RC/+) and Pkd1^RC/RC mice. In normal mice, CD-specific TGF-β1 overexpression caused tubule dilations by 5 wk of age that were accompanied by increased levels of phosphorylated SMAD3, α-smooth muscle actin, vimentin, and periostin; however, it did not induce overt cyst formation by 20 wk. In Pkd1^RC/RC mice, CD overexpression of TGF-β1 increased cyst epithelial cell proliferation. However, extensive fibrosis limited cyst enlargement and caused contraction of the kidneys, leading to a loss of renal function and a shortened lifespan of the mice. These data demonstrate that TGF-β1-induced fibrosis constrains cyst growth and kidney enlargement and accelerates the decline of renal function, supporting the hypothesis that a combined therapy that inhibits renal cyst growth and fibrosis will be required to effectively treat ADPKD.