The activated form of TGF-β is a known regulator of epithelial cell autonomous tumor initiation, progression, and metastasis. Recent studies have also indicated that TGF-β mediates interactions between cancer cells and their local tumor microenvironment. Specifically, the loss of TGF-β signaling in stromal components including fibroblasts and T-cells can result in an “activated” microenvironment that supports and even initiates transformation of adjacent epithelial cells. TGF-β signaling in cancer can be regulated through mechanisms involving ligand activation and expression of essential components within the pathway including the receptors and downstream effectors. TGF-β signaling in the tumor microenvironment significantly impacts carcinoma initiation, progression, and metastasis via epithelial cell autonomous and interdependent stromal–epithelial interactions in vivo. J. Cell. Biochem. 101: 851–861, 2007. © 2007 Wiley-Liss, Inc.