During chronic liver injury, transforming growth factor beta (TGF-beta) plays a prominent role in stimulating liver fibrogenesis by myofibroblast-like cells derived from hepatic stellate cells (HSCs). On the other hand, Smad 7 was recently shown to antagonize the TGF-beta-induced activation of signal-transducing Smads (2 and 3). In this study, we investigated the regulatory mechanisms of the TGF-beta signals in rat HSCs during acute liver injury and myofibroblasts (MFBs) during chronic liver injury, focusing on the roles of Smad 2 and antagonistic Smad 7. In acute liver injury, HSC-derived TGF-beta increased plasminogen activator inhibitor type 1 (PAI-1) and alpha2(I) procollagen (COL1A2) transcripts. Smad 2 in HSCs during liver injury and primary cultured HSCs were activated by an autocrine mechanism, because high levels of Smad 2 phosphorylation and induction of PAI-1 transcript by TGF-beta were observed in HSCs. Thereafter, Smad 7 induced by TGF-beta negatively regulated the Smad 2 action. These results indicated that endogenous TGFbeta-mediated Smad 7 in HSCs terminated the fibrotic signals mediated by signal-transducing Smads, and might be involved in the transient response to autocrine TGF-beta signal after acute liver injury. By contrast, Smad 7 was not induced by the autocrine TGF-beta signal, and constitutive Smad 2 activation was observed in MFBs throughout chronic liver injury, although Smad 7 could inhibit the TGF-beta signal requiring Smad 2 phosphorylation by activated TGF-beta receptor in cultured MFBs. This constitutive phosphorylation of Smad 2 by endogenous TGF-beta under a low level of Smad 7 could be involved in the progression of liver fibrosis.