Transforming growth factor (TGF) beta is a potent regulator of cell-matrix and cell-cell adhesions (collectively termed cellular adhesions). Cellular adhesions play crucial roles in controlling the differentiation of epithelial cells and in maintaining the integrity of the epithelium. Loss of TGF beta-responsiveness is thought to be an important early initiating event in the malignant progression of epithelial cancer. In the TGFbeta-responsive human colon adenocarcinoma Moser cells, TGFbeta promotes cellular adhesions and suppresses their malignant phenotype. TGFbeta promotes cell-matrix adhesion by inducing the synthesis of extracellular matrix (ECM) adhesion molecules and the expression of integrin receptors for these molecules (termed ECM remodeling). TGFbeta promotes cell-cell adhesion through the induction of E-cadherin expression, an epithelial associated homotypic cell-cell adhesion molecule, which also functions as a tumor suppressor in colon cancer. How TGFbeta regulates E-cadherin expression is not known. In this study, we showed that the induction of E-cadherin by TGFbeta was mediated through the activation of focal adhesion kinase (FAK), a major signaling molecule in focal adhesion contacts and that the activation of FAK was due to ECM remodeling and increased cell-matrix interactions. Thus, TGFbeta regulates cell-cell adhesion through its ability to remodel the ECM and to activate FAK through ECM remodeling.