The effects of transforming growth factor-beta (TGF-beta) and serum on proteoglycan synthesis by tissue explants from the fibrocartilaginous region of adult bovine tendon and by cells in culture from this region were assessed. The most characteristic effect of added TGF-beta on both explant tissue and cells in culture was enhanced synthesis of one small proteoglycan-biglycan. Lowered serum concentration diminished incorporation of Na2 35SO4 into proteoglycans. Added TGF-beta (1 ng/ml) stimulated cell proliferation, increased overall proteoglycan synthesis, and increased the length of glycosaminoglycan chains on all secreted proteoglycans. The effect of TGF-beta on cells in culture was highly consistent whereas explants from different animals showed greater variability in the response. It was concluded that TGF-beta did not specifically promote or maintain the cartilaginous nature of this tissue because supplementing medium with TGF-beta did not significantly alter the ratio of large/small proteoglycans synthesized by tissue explants. However, the observation of enhanced biglycan synthesis by TGF-beta suggests that TGF-beta could be involved in differentiation of regions of tendon subjected to compression, because compressed tendon contains both decorin and biglycan small proteoglycans whereas tensional tendon contains primarily decorin. Excess decorin added to cell culture medium did not affect the ability of TGF-beta to enhance synthesis of biglycan.