The secreted polypeptide transforming growth factor-beta (TGF-beta) exerts its multiple activities through type I and II cell surface receptors. In epithelial cells, activation of the TGF-beta signal transduction pathways leads to inhibition of cell proliferation and an increase in extracellular matrix production. TGF-beta is widely expressed during development and its biological activity has been implicated in epithelial-mesenchymal interactions, e.g., in branching morphogenesis of the lung, kidney, and mammary gland, and in inductive events between mammary epithelium and stroma. In the present study, we investigated the effects of TGF-beta on mouse mammary epithelial cells in vitro. TGF-beta reversibly induced an alteration in the differentiation of normal mammary epithelial NMuMG cells from epithelial to fibroblastic phenotype. The change in cell morphology correlated with (a) decreased expression of the epithelial markers E- cadherin, ZO-1, and desmoplakin I and II; (b) increased expression of mesenchymal markers, such as fibronectin; and (c) a fibroblast-like reorganization of actin fibers. This phenotypic differentiation displays the hallmarks of an epithelial to mesenchymal transdifferentiation event. Since NMuMG cells make high levels of the type I TGF-beta receptor Tsk7L, yet lack expression of the ALK-5/R4 type I receptor which has been reported to mediate TGF-beta responsiveness, we evaluated the role of the Tsk7L receptor in TGF-beta- mediated transdifferentiation. We generated NMuMG cells that stably overexpress a truncated Tsk7L type I receptor that lacks most of the cytoplasmic kinase domain, thus function as a dominant negative mutant. These transfected cells no longer underwent epithelial to mesenchymal morphological change upon exposure to TGF-beta, yet still displayed some TGF-beta-mediated responses. We conclude that TGF-beta has the ability to modulate E-cadherin expression and induce a reversible epithelial to mesenchymal transdifferentiation in epithelial cells. Unlike other transdifferentiating growth factors, such as bFGF and HGF, these changes are accompanied by growth inhibition. Our results also implicate the Tsk7L type I receptor as mediating the TGF-beta-induced epithelial to mesenchymal transition.