p38 is associated with a macromolecular tRNA synthetase complex. It has an essential role as a scaffold for the complex, and genetic disruption of p38 in mice causes neonatal lethality. Here we investigated the molecular mechanisms underlying lethality of p38-mutant mice. p38-deficient mice showed defects in lung differentiation and respiratory distress syndrome. p38 was found to interact with FUSE-binding protein (FBP), a transcriptional activator of c-myc. Binding of p38 stimulated ubiquitination and degradation of FBP, leading to downregulation of c-myc, which is required for differentiation of functional alveolar type II cells. Transforming growth factor-beta (TGF-beta) induced p38 expression and promoted its translocation to nuclei for the regulation of FBP and c-myc. Thus, this work identified a new activity of p38 as a mediator of TGF-beta signaling and its functional importance in the control of c-myc during lung differentiation.