Long-term sustained mechano-chemical signals in tissue microenvironment regulate cell-state transitions. In recent work, we showed that laterally confined growth of fibroblasts induce dedifferentiation programs. However, the molecular mechanisms underlying such mechanically induced cell-state transitions are poorly understood. In this paper, we identify Lef1 as a critical somatic transcription factor for the mechanical regulation of de-differentiation pathways. Network optimization methods applied to time-lapse RNA-seq data identify Lef1 dependent signaling as potential regulators of such cell-state transitions. We show that Lef1 knockdown results in the down-regulation of fibroblast de-differentiation and that Lef1 directly interacts with the promoter regions of downstream reprogramming factors. We also evaluate the potential upstream activation pathways of Lef1, including the Smad4, Atf2, NFkB and Beta-catenin pathways, thereby identifying that Smad4 and Atf2 may be critical for Lef1 activation. Collectively, we describe an important mechanotransduction pathway, including Lef1, which upon activation, through progressive lateral cell confinement, results in fibroblast de-differentiation.