Transforming growth factor-beta (TGF-beta) increases or decreases nuclear factor kappa B (NFkappaB) signaling in a context-dependent manner through mechanisms that remain to be defined. The type III transforming growth factor-beta receptor (TbetaRIII) is a TGF-beta superfamily co-receptor with emerging roles in both mediating and regulating TGF-beta superfamily signaling. We have previously reported a novel interaction of TbetaRIII with the scaffolding protein, beta-arrestin2, which results in TbetaRIII internalization and downregulation of TGF-beta signaling. beta-arrestin2 also scaffolds interacting receptors with the mitogen-activated protein kinase and NFkappaB-signaling pathways. Here, we demonstrate that TbetaRIII, through its interaction with beta-arrestin2, negatively regulates NFkappaB signaling in MCF10A breast epithelial and MDA-MB-231 breast cancer cells. Increasing TbetaRIII expression reduced NFkappaB-mediated transcriptional activation and IkappaBalpha degradation, whereas a TbetaRIII mutant unable to interact with beta-arrestin2, TbetaRIII-T841A, had no effect. In a reciprocal manner, short hairpin RNA-mediated silencing of either TbetaRIII expression or beta-arrestin2 expression increased NFkappaB-mediated transcriptional activation and IkappaBalpha degradation. Functionally, TbetaRIII-mediated repression of NFkappaB signaling is important for TbetaRIII-mediated inhibition of breast cancer cell migration. These studies define a mechanism through which TbetaRIII regulates NFkappaB signaling and expand the roles of this TGF-beta superfamily co-receptor in regulating epithelial cell homeostasis.