TGF-β (transforming growth factor-β) signaling is involved in a myriad of cellular processes and its dysregulation has been implicated in many human diseases, including fibrosis and cancer. TGF-β transcriptional responses are controlled by tail phosphorylation of transcription factors SMAD2 and SMAD3 (mothers against decapentaplegic homolog 2/3). Therefore, targeted dephosphorylation of phospho-SMAD3 could provide an innovative mechanism to block some TGF-β-induced transcriptional responses, such as the transcription of SERPINE-1, which encodes plasminogen activator inhibitor 1 (PAI-1). Here, by developing and employing a bifunctional molecule, BDPIC (bromoTAG-dTAG proximity-inducing chimera), we redirected multiple phosphatases, tagged with bromoTAG, to dephosphorylate phospho-SMAD3, tagged with dTAG. Using CRISPR-Cas9 technology, we generated homozygous double knock-in A549 ^{bromoTAG/bromoTAG} PPM1H/ ^dTAG/dTAGSMAD3 cells, in which the BDPIC-induced proximity between bromoTAG-PPM1H and dTAG-SMAD3 led to a robust dephosphorylation of dTAG-SMAD3 and a significant decrease in SERPINE-1transcription. Our work demonstrates targeted dephosphorylation of phospho-proteins as an exciting modality for rewiring cell signaling.