The transforming growth factor beta (TGF-beta) plays an important role in constraining cellular proliferation, but it is also a potent inducer of programmed cell death or apoptosis. Here, we demonstrate that TGF-beta can have an opposite effect, acting as a survival factor to prevent c-Myc-induced cell death in Rat-1 fibroblasts. However, in marked contrast to TGF-beta, Smad2, which is a critical intracellular mediator of the TGF-beta signaling pathway, functions as an antagonist to induce increased cell death. The protective activity of TGF-beta was associated with the activation of c-Jun N-terminal Kinase (JNK) and was not linked to the ability of TGF-beta to promote cell cycle progression. Expression of dominant-interfering forms of various components of the JNK signaling pathway, including Rac1, Cdc42, mitogen-activated protein kinase kinase 4 (MKK4), and c-Jun, abolished TGF-beta-mediated cell survival. Furthermore, overexpression of the constitutively activated mutant RacL61F37A, which selectively stimulates JNK cascade but not G1 cell cycle progression or actin polymerization, was sufficient to prevent apoptosis induced by c-Myc. These findings describe a differential effect of two separated signaling pathways of TGF-beta and indicate for the first time that Smad2 can act as antagonist to suppress TGF-beta-dependent cell survival. Oncogene (2000) 19, 1277 - 1287.