The tumor suppressor gene deleted in pancreatic cancer locus 4 (DPC4) is inactivated in about 50% of pancreatic adenocarcinomas. DPC4 was found to be homologous to Smad4 and may function as a transcription factor in the transforming growth factor beta (TGF-beta) receptor-mediated signal transduction pathway. We have investigated the role of DPC4 in the TGF-beta receptor-mediated signal transduction cascade in five human pancreatic cancer cell lines (Panc-1, MDAPanc-28, HS766T, Capan-1, and MiaPaCa-2). Our results demonstrate that the loss of responsiveness to TGF-beta-induced growth inhibition correlates with the loss of expression of DPC4. We have shown that TGF-beta induces p21waf1 expression in Panc-1 cells, whereas no induction of p21waf1 expression by TGF-beta was detected in the other four cell lines lacking either DPC4 expression or the TGF-beta type II receptor. No increase in p21waf1 mRNA stability was observed after treatment with TGF-beta, which suggests that the induction of p21waf1 in Panc-1 cells is transcriptionally regulated by TGF-beta. Our data also demonstrate that the expression of DPC4 is directly involved in TGF-beta-mediated induction of the 3TP-lux reporter gene, which contains a known TGF-beta-inducible plasminogen activator inhibitor promoter. These data suggest that: (a) TGF-beta-mediated induction of p21waf1 and subsequent growth inhibition require the expression of DPC4; (b) p21waf1 is a downstream target gene of DPC4; and (c) transfection of the DPC4 gene restores the TGF-beta-inducible gene expression. Inactivation of the tumor suppressor gene DPC4 and other components of the TGF-beta signal cascades may abolish one of the key negative controls of cell proliferation in pancreatic adenocarcinomas.