Acquiring resistance against transforming growth factor β (TGFβ)-induced growth inhibition at early stages of carcinogenesis and shifting to TGFβ's tumour-promoting functions at later stages is a pre-requisite for malignant tumour progression and metastasis. We have identified the transcription factor distal-less homeobox 2 (Dlx2) to exert critical functions during this switch. Dlx2 counteracts TGFβ-induced cell-cycle arrest and apoptosis in mammary epithelial cells by at least two molecular mechanisms: Dlx2 acts as a direct transcriptional repressor of TGFβ receptor II (TGFβRII) gene expression and reduces canonical, Smad-dependent TGFβ signalling and expression of the cell-cycle inhibitor p21(CIP1) and increases expression of the mitogenic transcription factor c-Myc. On the other hand, Dlx2 directly induces the expression of the epidermal growth factor (EGF) family member betacellulin, which promotes cell survival by stimulating EGF receptor signalling. Finally, Dlx2 expression supports experimental tumour growth and metastasis of B16 melanoma cells and correlates with tumour malignancy in a variety of human cancer types. These results establish Dlx2 as one critical player in shifting TGFβ from its tumour suppressive to its tumour-promoting functions.