Transforming growth factor beta (TGF-beta) is a growth factor with multiple biological properties including stimulation and inhibition of cell proliferation. To determine whether TGF-beta is involved in hepatocyte growth responses in vivo, we measured the levels of TGF-beta mRNA in normal liver and during liver regeneration after partial hepatectomy in rats. TGF-beta mRNA increases in the regenerating liver and reaches a peak (about 8 times higher than basal levels) after the major wave of hepatocyte cell division and mitosis have taken place and after the peak expression of the ras protooncogenes. Although hepatocytes from normal and regenerating liver respond to TGF-beta, they do not synthesize TGF-beta mRNA. Instead, the message is present in liver nonparenchymal cells and is particularly abundant in cell fractions enriched for endothelial cells. TGF-beta inhibits epidermal growth factor-induced DNA synthesis in vitro in hepatocytes from normal or regenerating liver, although the dose-response curves vary according to the culture medium used. We conclude that TGF-beta may function as the effector of an inhibitory paracrine loop that is activated during liver regeneration, perhaps to prevent uncontrolled hepatocyte proliferation.