Fibroblast growth factor 10 (FGF10) is a mesenchymal paracrine-acting factor that plays a key role in the organogenesis of the prostate, and Fgf10 transcripts exhibit a highly restricted expression pattern within prostatic mesenchyme. To study the regulation of Fgf10 we have used organ rudiments grown in vitro as well as a primary stromal cell system derived from the ventral mesenchymal pad (VMP), a condensed area of mesenchyme known to induce prostatic organogenesis. Characterization of VMP cells (VMPCs) showed that they retained expression of AR as well as transcripts for FGF10 and TGFbeta1, -2, and -3. We propose that VMPCs are a good model of specialized mesenchyme involved in prostatic organogenesis and are distinct from general urogenital sinus mesenchyme/stroma. Treatment of VMPCs with TGFbeta1 resulted in a rapid and transient decrease in Fgf10 transcript levels, which were reduced 9-fold at 3 h. TGFbeta1 also inhibited Fgf10 expression in VMP organ rudiments grown in vitro. To further analyze Fgf10 regulation, 6 kb of mouse genomic sequence 5' to the translation start site was characterized by promoter analysis. Deletion analysis of the Fgf10 promoter in VMPCs identified a region of the promoter that mediated a significant proportion of promoter activity as well as mediating promoter down-regulation by TGFbeta1. This element was located between nucleotides -182 and -172 and contained a consensus Sp1 binding site. Taken together, our data suggest that TGFbeta1 is a regulator of Fgf10 expression in prostatic mesenchyme and that a proximal element within the Fgf10 promoter plays an important role in its regulation and expression.