Transforming growth factor beta (TGF beta) binds with high affinity to the type II receptor, a transmembrane protein with a cytoplasmic serine/threonine kinase domain. We show that the type II receptor requires both its kinase activity and association with another TGF beta-binding protein, the type I receptor, to signal growth inhibition and early gene responses. Receptors I and II associate as interdependent components of a heteromeric complex: receptor I requires receptor II to bind TGF beta, and receptor II requires receptor I to signal. This mode of operation points to fundamental differences between this receptor and the protein-tyrosine kinase cytokine receptors.