The etiology of aortic aneurysms is poorly understood, but it is associated with atherosclerosis, hypercholesterolemia, and abnormal transforming growth factor β (TGF-β) signaling in smooth muscle. Here, we investigated the interactions between these different factors in aortic aneurysm development and identified a key role for smooth muscle cell (SMC) reprogramming into a mesenchymal stem cell (MSC)-like state. SMC-specific ablation of TGF-β signaling in Apoe^−/− mice on a hypercholesterolemic diet led to development of aortic aneurysms exhibiting all the features of human disease, which was associated with transdifferentiation of a subset of contractile SMCs into an MSC-like intermediate state that generated osteoblasts, chondrocytes, adipocytes, and macrophages. This combination of medial SMC loss with marked increases in non-SMC aortic cell mass induced exuberant growth and dilation of the aorta, calcification and ossification of the aortic wall, and inflammation, resulting in aneurysm development.