Idiopathic pulmonary fibrosis (IPF) is a chronic, progressive, and irreversible lung disease of unknown cause. It has been reported that both lung resident mesenchymal stem cells (LR‐MSCs) and tumor necrosis factor‐α (TNF‐α) play important roles in the development of pulmonary fibrosis. However, the underlying connections between LR‐MSCs and TNF‐α in the pathogenesis of pulmonary fibrosis are still elusive. In this study, we found that the pro‐inflammatory cytokine TNF‐α and the transcription factor nuclear factor kappa B (NF‐κB) p65 subunit were both upregulated in bleomycin‐induced fibrotic lung tissue. In addition, we discovered that TNF‐α promotes myofibroblast differentiation of LR‐MSCs through activating NF‐κB signaling. Interestingly, we also found that TNF‐α promotes the expression of β‐catenin. Moreover, we demonstrated that suppression of the NF‐κB signaling could attenuate myofibroblast differentiation of LR‐MSCs and bleomycin‐induced pulmonary fibrosis which were accompanied with decreased expression of β‐catenin. Our data implicates that inhibition of the NF‐κB signaling pathway may provide a therapeutic strategy for pulmonary fibrosis, a disease that warrants more effective treatment approaches.