Physiological and pathological degradation of cartilage extracellular matrix (ECM) is regulated by the balance between tissue inhibitors of metalloproteinases (TIMPs) and matrix metalloproteinases (MMPs). We examined the potential of chondrocytes from normal bovine or human osteoarthritic (OA) cartilage to express RNA for the new inhibitor TIMP-3 and studied its regulation by an inducer of matrix synthesis, transforming growth factor-beta (TGF-beta). Freshly released chondrocytes constitutively expressed three transcripts of TIMP-3 that are induced by serum factors. In primary cultures of chondrocytes, one of these factors, TGF-beta, increased TIMP-3 mRNA in a dose-dependent fashion that required de novo protein synthesis and transcription. TGF-beta did not alter stability of the TIMP-3 transcripts in RNA decay time-courses, suggesting a transcriptional control. Nuclear run-on assays confirmed increased rate of TIMP-3 gene transcription by TGF-beta. An antiinflammatory glucocorticoid, dexamethasone, inhibited the basal, and suppressed partially the TGF-beta-inducible, TIMP-3 expression in primary bovine and human chondrocytes. DNA sequencing of bovine TIMP-3 cDNA revealed an open reading frame of a 211-amino-acid protein containing signal peptide and 12 conserved cysteines. The encoded protein differed from human TIMP-3 at four positions. The constitutive expression and evolutionary conservation of TIMP-3 imply its important function. TIMP-3 induction by TGF-beta suggests the role of this factor and TIMP-3 in cartilage remodeling with important implications for arthritis.