Previously, we have shown that transforming growth factor beta 1 (TGFbeta1) overexpression in suprabasal epidermis suppresses skin carcinogenesis at early stages, but promotes tumor invasion at later stages. To elucidate the role of TGFbeta1 overexpression in naturally occurring human squamous cell carcinomas (SCC), we screened TGFbeta1 expression patterns in human skin SCC samples and found that TGFbeta1 was overexpressed with two distinct patterns: either predominantly in suprabasal layers or throughout tumor epithelia including basal proliferative cells. To determine the effect of TGFbeta1 overexpression in basal keratinocytes, we generated transgenic mice expressing wild-type TGFbeta1 in basal keratinocytes and hair follicles using the K5 promoter (K5.TGFbeta1(wt)). Surprisingly, these mice developed a severe inflammatory skin disorder. Inflammation was also observed in head and neck tissue when TGFbeta1 transgene expression was inducibly expressed in head and neck epithelia in our gene-switch-TGFbeta1 transgenic mice. Given the importance of inflammation in cancer development, our data suggest that TGFbeta1-induced inflammation may override its tumor-suppressive effect even at early stages of skin carcinogenesis. This notion is further suggested by our recent study that Smad3 knockout mice were resistant to skin chemical carcinogenesis at least in part via abrogation of endogenous TGFbeta1-induced inflammation.