Down-regulation of the transforming growth factor-beta (TGF-beta) signaling system is a strategy for preventing scarring during wound healing. Human corneal and limbal fibroblasts were cultured on the stromal matrix side of preserved human amniotic membrane. The levels of TGF-beta1, beta2, and beta3 and TGF-beta type II receptor transcripts and TGF-beta1 and beta2 proteins were suppressed as early as 8 hr and more dramatically at 24 hr after contact with an amniotic membrane. This suppressive effect was accompanied by down-regulation of alpha-smooth muscle actin, EDA spliced form of fibronectin, and integrin alpha5. It persisted even when challenged by 10 ng/ml TGF-beta1. In contrast with their counterparts grown on plastic or in collagen gel, such suppression in amniotic membrane cultures remained complete after 1 week of culturing. Cells cultured on amniotic membrane showed significantly reduced [3H]-thymidine incorporation compared to cells cultured on plastic and displayed no DNA fragmentation. These results reveal a novel mechanism by which the TGF-beta signaling system, DNA synthesis, and subsequent myofibroblast differentiation can be suppressed by an amnionic membrane matrix. This action explains in part the antiscarring results of amniotic membrane transplantation used for ocular surface reconstruction, a surgical technique applicable to other subspecialties. It may also explain in part why fetal wound healing is scarless.