The recent identification and cloning of mammalian transforming growth factor beta (TGFbeta) receptors permits further analysis of the importance of the TGFbeta family in intestinal biology. Expression of the type II TGFbeta receptor was examined in gastrointestinal cell lines and tissues. The 5.5 kb type II mRNA species was detected in poly-(A) mRNA isolated from the rat small bowel and colon. Northern blot analysis of RNA isolated from epithelial and non-epithelial small intestinal cell fractions showed the majority of receptor mRNA localized in the non-epithelial compartment. Immunohistochemical localization in the small intestine and colon supported the RNA findings; that is, expression was greatest in the lamina propria and muscularis. Staining was also detectable in the epithelium, where it was most prominent in the villus tip cells and absent in crypt cells. These findings mirror expression of TGFbeta in the epithelial compartment. The IEC-6, IPEC and RIE-1 cell lines, all of which are non-transformed, were growth inhibited by TGFbeta and expressed type II receptor mRNA and protein. By contrast, the ras-transfected RIE-1, HT-29, Caco-2 and SW-620 transformed lines were not growth inhibited by TGFbeta and all demonstrated a marked reduction in type II TGFbeta receptor mRNA expression and protein abundance by cross-linking. In conclusion, (i) colocalization of both ligand and receptor establishes the existence of potential autocrine and/or paracrine pathways for TGFbeta in the normal intestine and (ii) down-regulation of the type II TGFbeta receptor occurs in association with cellular transformation and may contribute to intestinal carcinogenesis.