Co-cultivation of normal and transformed fibroblasts in the presence of exogenously added transforming growth factor type beta I (TGF-beta I) leads to a drastic reduction of colony-forming transformed cells. This inhibitory effect is dependent both on the dose of TGF-beta applied and the density of normal cells. It does not reflect a direct action of TGF-beta on transformed cells, but is rather induced by TGF-beta in normal cells. In the absence of exogenously added TGF-beta, normal cells exhibit a basal inhibitory activity, which can be abrogated by anti-TGF-beta. TGF-beta-mediated inhibition of transformed cells by normal cells may be considered as a novel potent controlling step in carcinogenesis.