Transforming growth factor (TGF) beta plays an important role in normal pulmonary morphogenesis and function and in the pathogenesis of lung disease. The effect of TGFbeta is regulated via a selective pathway of TGFbeta synthesis and signaling that involves activation of latent TGFbeta, specific TGFbeta receptors, and intracellular signaling via Smad molecules. All three isoforms of TGFbeta are expressed at high levels during normal lung development, being particularly important for branching morphogenesis and epithelial cell differentiation with maturation of surfactant synthesis. Small amounts of TGFbeta are still present in the adult lung, and TGFbeta is involved in normal tissue repair following lung injury. However, in a variety of forms of pulmonary pathology, the expression of TGFbeta is increased. These include chronic lung disease of prematurity as well as several forms of acute and chronic adult lung disease. While TGFbeta1 appears to be the predominant isoform involved, elevated levels of all three isoforms have been demonstrated. The increase in TGFbeta precedes abnormalities in lung function and detectable lung pathology, but correlates with the severity of the disease. TGFbeta plays a key role in mediating fibrotic tissue remodeling by increasing the production and decreasing the degradation of connective tissue via several mechanisms.