Transforming growth factor beta 1 (TGF-beta1) affects growth plate chondrocytes through Smad-mediated mechanisms and has been shown to increase protein kinase C (PKC). This study determined if PKC mediates the physiological response of rat costochondral growth zone (GC) chondrocytes to TGF-beta1; if the physiological response occurs via type II or type III TGF-beta receptors, and, if so, which receptor mediates the increase in PKC; and the signal transduction pathways involved. Treatment of confluent GC cells with TGF-beta1 stimulated [(3)H]thymidine and [(35)S]sulfate incorporation as well as alkaline phosphatase (ALPase) and PKC specific activities. Inhibition of PKC with chelerythrine, staurosporine, or H-7 caused a dose-dependent decrease in these parameters, indicating that PKC signaling was involved. TGF-beta1-dependent PKC and the physiological response of GC cells to TGF-beta1 was reversed by anti-type II TGF-beta receptor antibody and soluble type II TGF-beta receptor, showing that TGF-beta1 mediates these effects through the type II receptor. The increase in [3H]thymidine incorporation and ALPase specific activity were also regulated by protein kinase A (PKA) signaling, since the effects of TGF-beta1 were partially blocked by the PKA inhibitor H-8. The mechanism of TGF-beta1 activation of PKC is through phospholipase A(2) (PLA(2)) and not through phospholipase C (PLC). Arachidonic acid increased PKC in control cultures and was additive with TGF-beta1. Prostanoids are required, as indomethacin blocked the effect of TGF-beta1, and Cox-1, but not Cox-2, is involved. TGF-beta1 stimulates prostaglandin E(2) (PGE(2)) production and exogenous PGE(2) stimulates PKC, but not as much as TGF-beta1, suggesting that PGE(2) is not sufficient for all of the prostaglandin effect. In contrast, TGF-beta1 was not regulated by diacylglycerol; neither dioctanoylglycerol (DOG) nor inhibition of diacylglycerol kinase with R59022 had an effect. G-proteins mediate TGF-beta1 signaling at different levels in the cascade. TGF-beta1-dependent increases in PGE(2) levels and PKC were augmented by the G protein activator GTP gamma S, whereas inhibition of G-protein activity via GDP beta S, pertussis toxin, or cholera toxin blocked stimulation of PKC by TGF-beta1, indicating that both G(i) and G(s) are involved. Inhibition of PKA with H-8 partially blocked TGF-beta1-dependent PKC, suggesting that PKA inhibition on the physiological response was via PKA regulation of PKC signaling. This indicates that multiple interacting signaling pathways are involved: TGF-beta1 stimulates PLA(2) and prostaglandin release via the action of Cox-1 on arachidonic acid. PGE(2) activates the EP2 receptor, leading to G-protein-dependent activation of PKA. PKA signaling results in increased PKC activity and PKC signaling regulates proliferation, differentiation, and matrix synthesis.