Long interspersed nuclear element-1 (L1) is a genetic element that mobilizes throughout the mammalian genome via retrotransposition and damages host DNA via mutational insertions, chromosomal rearrangements, and reprogramming of gene expression. The cellular mechanisms responsible for aberrant L1 expression during cancer pathogenesis are unclear. Previously, we have shown that L1 reactivation in several human cell lines is dependent upon the activation of aryl hydrocarbon receptor (AhR), a ligand-activated transcription factor member of the PAS superfamily of proteins. We also showed that ectopic expression of L1 reprograms the HepG2 genome leading to epithelial-to-mesenchymal transition (EMT). Here we present evidence that reactivation of L1 and modulation of EMT in HepG2 cells by the AhR ligand benzo(a)pyrene (BaP) is effected through the canonical TGF-β1 signaling pathway. BaP increased TGF-β1 mRNA, SMAD2 phosphorylation and decreased expression of E-Cadherin. The functional relevance of these interactions and the involvement of TGFBR1/ALK5 and SMAD2/3 were confirmed by siRNA interference. Furthermore, expression of L1-encoded ORF1p was positively correlated with the activation of TGF-β1 signaling in human hepatocarcinoma samples at various stages of malignant progression. These results indicate that ligand-mediated AhR activation regulates L1 via canonical TGF-β1 signaling and raise important questions about the molecular etiology of human hepatocarcinomas.