Hemopoietic cells or bone marrow-derived cells contribute to tissue formation, possibly by transdifferentiation into smooth muscle cells (SMCs) or myofibroblasts. In this study our goal is to examine the effects of transforming growth factor-beta1 (TGF-beta1) on the transdifferentiation of the monocyte/macrophage lineage into SMC-like cells. Using rat peritoneal exudate macrophages, we investigated the expression of smooth muscle-specific differentiation markers, such as alpha-smooth muscle actin, embryonic smooth muscle myosin heavy chain, and calponin. The treatment of macrophages with TGF-beta1 enhanced the expression of SMC-specific markers at day 4; after 7 days in culture, a higher level of expression (approximately 3- to 5-fold) was detected on Western blots. In contrast, TGF-beta1 decreased the expression of CD11b, which is a macrophage marker. Furthermore, we examined the effect of the TGF-beta type 1 receptor inhibitor SB-431542 and a replication-defective adenovirus construct expressing Smad7 (Adeno-Smad7), which inhibits TGF-beta signaling by interfering with the activation of other Smad proteins. Both SB-431542 and Adeno-Smad7 suppressed the expression of SMC-specific markers. These results indicated that TGF-beta signaling is essential for the transdifferentiation of macrophages into SMC-like cells. Elucidating the mechanism by which macrophages transdifferentiate into SMC-like cells may reveal new therapeutic targets for preventing vascular diseases.