The type III TGF-β receptor (TβRIII) is a ubiquitous co-receptor for TGF-β superfamily ligands with roles in suppressing cancer progression, in part through suppressing cell motility. Here we demonstrate that TβRIII promotes epithelial cell adhesion to fibronectin in a β-arrestin2 dependent and TGF-β/BMP independent manner by complexing with active integrin α5β1, and mediating β-arrestin2-dependent α5β1 internalization and trafficking to nascent focal adhesions. TβRIII-mediated integrin α5β1 trafficking regulates cell adhesion and fibronectin fibrillogenesis in epithelial cells, as well as α5 localization in breast cancer patients. We further demonstrate that increased TβRIII expression correlates with increased α5 localization at sites of cell-cell adhesion in breast cancer patients, while higher TβRIII expression is a strong predictor of overall survival in breast cancer patients. These data support a novel, clinically relevant role for TβRIII in regulating integrin α5 localization, reveal a novel crosstalk mechanism between the integrin and TGF-β superfamily signaling pathways and identify β-arrestin2 as a regulator of α5β1 trafficking.