Diabetes mellitus can reinforce the small airway dysfunction of chronic obstructive pulmonary disease (COPD) patients. The epithelial-mesenchymal transition (EMT) that is associated with small airway remodeling is activated in the airway epithelial cells (AECs) of both COPD patients and diabetic patients. Transforming growth factor β (TGF-β) can induce EMT via the TGF-β/Smad pathway. We found that the small airway dysfunction and airflow limitations were worse in COPD patients with a history of smoking or diabetes than in simple COPD patients, and were even worse in COPD patients with both histories. Pulmonary ventilation tests in rats confirmed these findings. EMT and the TGF-β/Smad pathway were activated in the AECs of rats with COPD or diabetes, and the combination of COPD and diabetes amplified those effects, as indicated by downregulation of Zo1 and upregulation of vimentin, TGF-β and Smad4 in immunohistochemical experiments. Twenty-four-hour treatment with 25 mM glucose and/or 1% cigarette smoke extract upregulated vimentin, TGF-β, Smad2/3/4 and p-Smad2/3, but downregulated Zo1 in AECs. Suppressing the TGF-β/Smad pathway prevented EMT activation and small airway remodeling following cigarette smoke exposure and hyperglycemia. Thus, cigarette smoke and high glucose exposure induces EMT via the TGF-β/Smad pathway in AECs.