Members of transforming growth factor beta (TGF-beta) family are potent regulators of multiple cellular functions, including cell proliferation, differentiation, migration, organization, and death. Yet the signaling pathways underpinning a wide array of biological activities of TGF-beta appear to be deceptively simple. At every step from TGF-beta secretion to activation of its target genes, the activity of TGF-beta is regulated tightly, both positively and negatively. Biologically active TGF-beta is cleaved from a precursor protein (latent form) and multiple process factors control the levels of active TGF-beta. The efficient secretion, correct folding and deposition to the extracellular matrices require the cosecretion of latent TGF-beta binding proteins (LTBPs). Once activated, TGF-beta ligand signals through a heteromeric receptor complex of two distinct type I and type II serine/threonine kinase receptors TbetaRI and TbetaRII. Many factors appear to influence the formation of the active ligand-receptor complex. The relative orientation of TbetaRI and TbetaRII in the ligand-receptor complex is critical for activation: through TbetaRI, the activated ligand-receptor complex directly binds and phosphorylates downstream intracellular substrates, called Smads. Inhibitory Smads, Smad6 and 7, can antagonize this process. The phosphorylation of Smads leads to the formation of complexes which translocate to the nucleus. Other signaling systems can modulate the activity of the Smads: e.g., ras activity can prevent Smad complexes from entering the nucleus and specific ubiquitin ligases can target Smad for degradation. In the nucleus, the Smad complexes associate with other transcription activators or suppressors to regulate gene expression, either positively or negatively. The combined effects of the positive and/or negative TGF-beta controlled gene expression together with the endogenous protein set of the target cell are responsible for the multiplicity of biological functions.