Both normal and neoplastic tissues have a stroma comprised of fibroblasts which deposit an extracellular matrix (ECM) enriched in collagen. In most normal tissues, the synthesis and breakdown of the ECM is maintained at a low level. However, in normal adult tissues such as endometrium, and in rapidly growing embryonic and neoplastic tissues, there is a significant increase in the synthesis and/or breakdown of ECM. The homeostasis of the ECM is maintained by a molecular repertoire which appears to consist of TGF-beta and lefty. TGF-beta acts as a pro-fibrogenic cytokine by increasing the synthesis of collagen and decreasing the degradation of ECM. Physiologic levels of TGF-beta maintains tissue homeostasis and aberrant over-expression of TGF-beta leads to tissue fibrosis. TGF-beta acts through a core Smad signaling pathway which is initiated by the binding of homo-dimeric TGF-beta protein to two type I and II receptors. The constitutively active receptor type II leads to phosphorylation of receptor type I which, in turn, causes the R-Smads to get phosphorylated. The downstream gene transcriptional activity of this event includes significant increase in connective tissue growth factor (CTGF) and collagen mRNA synthesis which leads to deposition of collagen in tissues. Lefty inhibits Smad2 phosphorylation initiated by TGF-beta or its receptor and prevents CTGF promoter activity driven by TGF-beta. Moreover, lefty inhibits CTGF and collagen mRNA synthesis and increases collagenolysis and elastolysis and as a result of these actions, lefty significantly reduces the amount of collagen deposited in tissues. Thus, TGF-beta and lefty might coordinately participate in the homeostasis of ECM in tissues.