Birt-Hogg-Dubé (BHD) syndrome is an inherited cancer susceptibility disease characterized by skin and kidney tumors, as well as cystic lung disease, which results from loss-of-function mutations in the BHD gene. BHD is also inactivated in a significant fraction of patients with sporadic renal cancers and idiopathic cystic lung disease, and little is known about its mode of action. To investigate the molecular and cellular basis of BHD tumor suppressor activity, we generated mutant Bhd mice and embryonic stem cell lines. BHD-deficient cells exhibited defects in cell-intrinsic apoptosis that correlated with reduced expression of the BH3-only protein Bim, which was similarly observed in all human and murine BHD-related tumors examined. We further demonstrate that Bim deficiency in Bhd(-/-) cells is not a consequence of elevated mTOR or ERK activity, but results instead from reduced Bim transcription associated with a general loss of TGFβ-mediated transcription and chromatin modifications. In aggregate, this work identifies a specific tumor suppressive mechanism for BHD in regulating TGFβ-dependent transcription and apoptosis, which has implications for the development of targeted therapies.